UNFI Sees Q3 Double-digit Net Sales, Income Rises

United Natural Foods Inc. has posted net sales for the third quarter of its fiscal 2012 ended April 28 of $1.39 billion, a $184.0 million, or 15.3 percent, increase versus net sales of $1.20 billion recorded in the year-ago period.

“Continued demand for UNFI’s products and services drove our 15.3 percent net sales growth during the fiscal third quarter,” explained Steven Spinner, president and CEO of the Providence, R.I.-based wholesaler. “Our results demonstrate UNFI’s continued commitment to growing at a rate that exceeds the industry while delivering exemplary customer service to the organic and specialty foods retailer.”

Gross margin was 17.6 percent for the third quarter of fiscal 2012, representing a 53 basis-point drop from gross margin of 18.2 percent for last year’s comparable period. Gross margin for the third quarter of fiscal 2012 was mainly affected by the ongoing shift in customer mix to the conventional supermarket channel, according to the company.

Total operating expenses as a percentage of net sales were 14.1 percent for the third quarter of fiscal 2012, a decline of 81 basis points from the third quarter of fiscal 2011. UNFI attributed this improvement to its continuing initiatives to boost productivity across the organization and lower operating expenses as a percentage of net sales. Total operating expenses grew by $16.3 million, or 9.0 percent, to $195.9 million compared with the year-ago period, which had operating expenses of $179.6 million.

Operating income as a percentage of net sales increased 27 basis points to 3.5 percent for the third quarter of fiscal 2012 versus the third quarter of fiscal 2011. Net income for the third quarter of fiscal 2012 rose by $5.7 million, or 24.3 percent, to $29.0 million or $0.59 per diluted share, from $23.4 million, or $0.48 per diluted share, for the year-ago period.

“Our associates’ continued efforts towards productivity improvements, combined with our strong sales volume, contributed to our operating margin expansion in the quarter,” added Spinner. “We believe our year-to-date results have left us in a solid position to achieve our operating result targets for fiscal 2012.”

Net sales for the nine months ended April 28 totaled $3.89 billion, a 15.5 percent increase over last year. Gross margin was 49 basis points lower than the year-ago period, at 17.6 percent of net sales for the nine months ended April 28.

At 14.7 percent of net sales, total operating expenses for the nine months ended April 28, 2012 were 39 basis points lower than last year. Operating expenses for the nine months ended April 28 include about $6.9 million of expenses related to the previously revealed restructuring and divestiture of UNFI’s conventional nonfood and general merchandise lines of business and onboarding expenses related to the company’s newest national customer. Excluding these expenses, operating expenses as a percentage of net sales were 14.5 percent for the nine months ended April 28, a decline of 57 basis points compared with the first nine months of fiscal 2011.

Operating income as a percentage of net sales was 2.9 percent for the nine months ended April 28, compared with 3.0 percent for the year-ago period. Excluding the approximately $6.9 million of restructuring and onboarding expenses noted in the paragraph above, operating income as a percentage of net sales was 3.1 percent for the first nine months of fiscal 2012, an eight basis-point rise over the same period in fiscal 2011.

Diluted earnings per share for the nine months ended April 28 was $1.35, an 8.0 percent increase from the first nine months of fiscal 2011. Excluding the earlier-mentioned restructuring and onboarding expenses, diluted earnings per share was $1.44 for the nine months ended April 28, a 15.2% increase over last year. Additionally, diluted earnings per share was affected by an increase in the weighted average diluted common shares outstanding to 49.0 million for the nine months ended April 28, 2012, from 47.5 million for the same period in fiscal 2011, as a result of UNFI’s public offering of 4,427,500 shares of its common stock completed late in the first quarter of fiscal 2011.

UNFI carries and distributes more than 60,000 products to more than 23,000 customer locations throughout the United States and Canada. The company serves a wide variety of retail formats including conventional supermarket chains, natural product superstores, independent retail operators and the foodservice channel.