United Natural Foods Inc. (UNFI) released third quarter earnings this month, beating analyst expectations and suggesting more positive news ahead for the natural & organic sectors. The company increased sales by 11% year-over-year to $986 million, and net profits grew 16% to $20 million. Company statements attribute the successful quarter to operational efficiencies and strong growth in the supernatural and supermarket channels. Said President and CEO Steve Spinner: “Our fiscal 2010 third quarter reflected the continuing rebound of the natural and organic industry as our growth accelerated during most of the quarter.” UNFI also raised its full-year sales guidance and narrowed full-year earnings to the higher end of the range.
More good news: UNFI extended its agreement with Whole Foods Market for an additional seven years, allowing UNFI to remain Whole Foods’ primary wholesale distributor in the markets it presently serves. This extension provides substantial earnings visibility to UNFI, as Whole Foods accounted for 33% of the company’s sales in fiscal year 2009.
NBJ Bottom Line
As UNFI goes, so goes much of the healthy foods market. With sales strong and trending in the right direction, UNFI’s earnings—and successful negotiation of a long-term deal with Whole Foods—point toward brighter days ahead. Signs of an economic recovery, especially in the natural & organic categories, continue to surface where we’d most expect them.
Also encouraging was the company update on its acquisition of the Canadian assets of SunOpta, with the full transaction on schedule and expected to close later this month. With evident progress on both the growth and operational fronts, it seems UNFI is the industry distribution leader for good cause.
For detailed analysis of the healthy foods market, including breakout sections on organic and natural foods, check out NBJ’s 2010 Healthy Foods Report, which was just released and is now available for immediate purchase. The report includes industry trends and competitive analysis, including more than 300 tables and graphs of growth estimates and market penetration for the U.S. healthy foods market, which includes natural, organic, functional and lesser-evil foods and beverages.
Related NBJ links: