For its 13-week first quarter of fiscal 2023 ended Oct. 29, United Natural Foods Inc. (UNFI) reported a net sales increase of 7.6% to $7.5 billion, primarily driven by inflation and new business, and a gross profit increase of $54 million, or 5.2%, to nearly $1.1 billion. The company’s net income decreased 13.2% to $66 million, and its earnings per diluted share (EPS) decreased 14.4% to $1.07, while adjusted EPS increased 2.7% to $1.13. UNFI’s adjusted EBITDA grew 3.5% to $207 million.
Also during the quarter, the grocery distributor entered into a commercial agreement to implement an industry-leading warehouse automation system and reduced its net debt by $253 million with initial proceeds from accounts receivable monetization.
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“Our performance this quarter reflects continued execution of our strategy in a dynamic operating environment as we improved fill rates and operating performance and saw more customers buying more categories from us than ever before,” said UNFI CEO Sandy Douglas. “We are leveraging our scale, diversification and capabilities to enhance connectivity between customers and suppliers, finding unique ways to create more value for both. We continued to invest in people and technology as part of our commitment to becoming a more effective, more efficient and more disciplined business, well positioned to capture a growing share of our $140 billion core addressable market and create even more value for shareholders.”
Added Douglas: “Looking ahead, our customer pipeline is robust, with new customer acquisition and expansion from existing customers expected in the second half of the year. We have enduring confidence in the opportunities before us and in our ability to capture them. We remain energized and focused on meeting the needs of our customers during the important holiday selling season, while delivering our fiscal 2023 guidance.”
UNFI’s new business during the quarter came from selling new or expanded categories to existing customers and adding new customers from its robust pipeline, partly offset by an expected decline in unit volume consistent with the overall industry.
Excluding the non-cash LIFO charge in both Q1 of fiscal 2023 and the year-ago period, the company’s gross profit grew $64 million, or 6.1%. The gross-profit rate in Q1 2023 was 14.6% of net sales and included a $21 million LIFO charge. Excluding this non-cash charge, gross profit rate was 14.8% of net sales. UNFI attributed the decrease in gross-profit rate, excluding the LIFO charge, to changes in customer mix as it continued to grow sales with larger customers.
Providence, R.I.-based UNFI delivers a wide variety of products to customer locations throughout North America, including natural product superstores, independent retailers, conventional supermarket chains, e-commerce retailers and foodservice customers. The largest publicly traded grocery distributor in America, the company is No. 49 on The PG 100, Progressive Grocer’s 2022 list of the top food and consumables retailers in North America.