UNFI net sales up 14%

UNFI net sales up 14%

Distributor recaps banner second quarter.

United Natural Foods Inc. (Nasdaq: UNFI) reported financial results for the second quarter of fiscal 2014 ended Feb. 1, 2014.

Second quarter fiscal 2014 highlights:

  • Net sales increased 13.9 percent, or $200.3 million, to $1.65 billion for the second quarter of fiscal 2014 compared to$1.45 billion for the same period last fiscal year
  • Diluted EPS was $0.56 for the second quarter of fiscal 2014, an increase of 21.7 percent from $0.46 for the same period last fiscal year
  • Operating margin was 3.0 percent of net sales for the second quarter of fiscal 2014, an increase of 27 basis points from the same period last fiscal year
  • Independent channel net sales growth accelerated to 11.6 percent

“Our independent channel grew over 11 percent during the quarter driven by continued innovation in products and services supported by UNFI's extensive product offering,” commented Steven Spinner, president and chief executive officer. “Continued demand for our products further demonstrates that the trend towards natural and organic consumption continues to gain momentum.”

Net sales for the second quarter of fiscal 2014 increased 13.9 percent to $1.65 billion from $1.45 billion in the second quarter of fiscal 2013. Gross margin was 16.3 percent for the second quarter of fiscal 2014 compared to 16.7 percent for the second quarter of fiscal 2013. Gross margin for the second quarter of fiscal 2014 was negatively impacted by severe weather, the foreign exchange impact from the declining value of the Canadian dollar on the Company's Canadian business and the ongoing shift in the Company’s sales mix.

Total operating expenses were 13.3 percent as a percentage of net sales for the second quarter of fiscal 2014, a decrease of 70 basis points compared with the same period last fiscal year. This improvement in expenses was driven by the continued shift in the sales mix to supernatural, supermarket and multi-unit independent customers, positive trends in the Company’s self-insurance accruals compared to the prior year and lapping of the prior year labor action costs. Total operating expenses for the second quarter of fiscal 2013 included $3.6 million of expenses related to the labor action at the Company's Auburn, Wash., facility. Excluding the Auburn labor action costs in the second quarter of fiscal 2013, operating expenses were 13.8 percent of net sales.

Operating income increased 25.3 percent, or $9.9 million, to $48.8 million for the second quarter of fiscal 2014 compared to $39.0 million for the second quarter of fiscal 2013. Operating income as a percentage of net sales for the second quarter of fiscal 2014 increased 27 basis points to 3.0 percent compared to the same period last fiscal year. Net income for the second quarter of fiscal 2014 increased $5.3 million, or 23.6 percent, to $28.0 million, or $0.56 per diluted share, from $22.6 million, or $0.46 per diluted share, for the second quarter of fiscal 2013. The second quarter of fiscal 2013 included the negative impact of approximately $0.04 per diluted share related to the Auburn, Wash., labor action.

First half fiscal 2014 summary

Net sales for the first half of fiscal 2014 totaled $3.25 billion, a 13.7 percent increase over the comparable prior fiscal year period. Gross margin was 12 basis points lower than the comparable prior fiscal year period, at 16.6 percent of net sales for the six months ended Feb. 1, 2014. Gross margin in the first half of fiscal 2014 was negatively impacted by severe weather and foreign exchange for the Company's Canadian business and the continued shift in sales growth towards supernatural, national supermarket and multi-unit independent customers. These challenges were partially offset by improved execution by the Company’s supply chain group, specifically with respect to inbound logistics and procurement.

At 13.6 percent of net sales, total operating expenses for the six months ended Feb. 1, 2014 were 46 basis points lower than the comparable prior fiscal year period. Total operating expenses increased $40.4 million, or 10.0 percent, to$442.5 million from $402.1 million for the six months ended Jan. 26, 2013. Total operating expenses in the first half of fiscal 2013 included approximately $4.6 million of expenses related to the labor action at the Company's Auburn, Wash., facility. Excluding these incremental expenses, operating expenses were $397.5 million or 13.9 percent of net sales.

Net income for the first half of fiscal 2014 increased $11.6 million, or 26.2 percent, to $55.7 million, or $1.12 per diluted share, from $44.2 million, or $0.89 per diluted share for the first half of fiscal 2013.

“Later this quarter we will finish construction of our Sturtevant, Wis., facility which will serve as our exciting new hub serving the greater Chicago market,” concluded Mr. Spinner.

 

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