UNFI Posts Solid Q1 Sales Growth

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UNFI Posts Solid Q1 Sales Growth

United Natural Foods, Inc. (UNFI) yesterday reported an increase of 17.2 percent, or $2.3 million, in net income for the first quarter of fiscal 2010 ended Oct. 31, 2009, to $15.5 million, or 36 cents per diluted share, from $13.2 million, or 31 cents per diluted share, for the first quarter of fiscal 2009. Net sales for the first quarter of fiscal 2010 came to $884.8 million, an uptick of 2.4 percent, or $20.5 million, from the $864.2 million recorded in the year-ago period. According to UNFI officials, most of this sales growth came from the convention supermarket and supernatural channels.

“Fiscal 2010 began with another quarter of strong year-over-year improvement,” said UNFI president and CEO Steven Spinner. “During the quarter, we began to see some signs of improvement, with reduced weekly sales volatility, supplier price increases returning to historical levels and improving trends in sales growth towards the end of the quarter.”

Operating income as a percentage of net sales grew to 3.1 percent for the quarter, from 2.9 percent last year, while operating expenses as a percentage of net sales fell to 15.5 percent for first quarter, a decrease of about 1.0 percent compared with the year-ago period, and operating expenses declined by $5.1 million, or 3.6 percent, to $137.4 million, vs. the quarter ended Nov. 1, 2008, which had operating expenses of $142.5 million.

Not all of the news was so positive, however. Gross margin was 18.6 percent for the quarter, representing an 80-basis-point plunge from the gross margin of 19.4 percent logged last year. UNFI attributed the decline mainly to a combination of lower fuel surcharge revenues resulting from lower average diesel prices vs. the quarter ended Nov. 1, 2008, and a change in the mix of sales by channel.

“During the first quarter, we successfully secured new conventional supermarket business as a direct result of our strategic expansion into specialty foods and products,” noted Spinner. “We expect that this business will begin to ship during the first calendar quarter of 2010. Additionally, we continue to gain momentum with our combined natural, organic and specialty product offerings, and are poised to open our newly announced Lancaster, Texas, distribution facility in August.”

During a conference call with analysts, yesterday, Spinner discussed such issues as UNFI’s new private brand, Field Day, which he said would continue to roll out new SKUS over the next couple of years, while the company considers concentrating on a smaller number of core brands within its Blue Marble portfolio, rather than the 27 brands currently offered; its progress in getting more suppliers involved in the company’s national category management initiative, which includes software to be rolled out in April or May; and UNFI’s use of sophisticated refrigerated multi-temperature equipment for perishables at DCs operated by the core business as well as its Albert’s Organics division.

UNFI additionally provided fiscal 2010 guidance for which period the company expects revenues to increase by about 2.5 percent to 5.0 percent over fiscal 2009 levels, to a range of $3.54 billion to $3.63 billion.

Providence, R.I.-based UNFI carries and distributes over 60,000 products to more than 17,000 customer locations nationwide. The company serves such retail formats as conventional supermarket chains, natural product superstores, independent retail operators and the foodservice channel.