United Natural Foods Reports 'Record' High Q3 Revenues

DAYVILLE, Conn. -- Reflecting the rising fortunes of natural and organic foods in the American marketplace, distributor United Natural Foods, Inc. (UNFI) here yesterday posted double-digit gains in sales and earnings for the third quarter of fiscal 2006.

The company, which supplies the major natural supermarket chains as well as conventional grocers, had net income of $12.3 million, or 29 cents, per diluted share, for the quarter ended April 29, a rise of 15.1 percent over last year. It reported revenues of $637.1 million, a surge of $102.7 million, or 19.2 percent, from the $534.3 million recorded in the year-ago period.

Substantial growth across all major sales channels of the wholesale segment contributed to the record sales, the company said.

Sales growth was consistent across all regions, according to UNFI president and c.e.o. Michael Funk, who spoke during a conference call yesterday. In the independent channel, sales soared nearly 20 percent; in supermarkets, they increased over 18 percent; and sales of supernaturals "grew in the low teens," he noted.

Funk also noted that the company's private label products now account for 3.34 percent of sales, and that UNFI's goal by the end of fiscal 2008 was 5 percent. He further said that the company would attempt to recoup the recent increase in fuel costs through a new fuel surcharge program, to be introduced this summer and spread over UNFI's customer base. Funk explained that the new program would be flexible enough "to recover a majority of fuel cost increases on a quarterly basis, insulating the company from fuel price volatility, for the most part."

Excluding special items, net income for the third quarter of fiscal 2006 rose 14.4 percent to $12.3 million, or 29 cents per diluted share, vs. $10.8 million, or 26 cents per diluted share, for the third quarter of fiscal 2005.

"Fiscal 2006 continues to be a strong year," noted Funk in a statement. "We posted another quarter of growth across all three major sales channels and realized a 19 percent increase in revenues and a 15 percent increase in earnings. These results reflect the continued strong consumer demand for natural and organic products, as well as the underlying strength of our sales channels across all regions in the country."

Funk noted that UNFI viewed Wal-Mart's full-scale entry into organics as "generally positive," since it would bring new awareness to the category and drive sales.

In response to its excellent financial results, the company is raising its projected revenue guidance to $2.42 billion to $2.45 billion for fiscal 2006, ending July 29, 2006 and narrowing its guidance on earnings per share, excluding special items, to a range of $1.08 to $1.10 per diluted share. Earlier UNFI had announced revenue guidance from $2.38 billion to $2.42 billion and earnings per share guidance, excluding potential special items, from $1.05 to $1.10 per diluted share for the fiscal year.

UNFI carries and distributes over 40,000 products to more than 20,000 customers across the United States. The company serves a broad assortment of retail formats, including conventional supermarket chains, natural product superstores, independent retail operators and the foodservice channel.

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