UNFI sales soar in Q3

UNFI sales soar in Q3

Net sales increased 13.8 percent to $1.78 billion for the third quarter of fiscal 2014 compared to $1.57 billion for the same period last fiscal year.

United Natural Foods Inc. (Nasdaq: UNFI) reported financial results for the third quarter of fiscal 2014 ended May 3, 2014.

Third quarter fiscal 2014 highlights:

  • Net sales increased 13.8 percent, or $215.5 million, to $1.78 billion for the third quarter of fiscal 2014 compared to $1.57 billion for the same period last fiscal year
  • Diluted EPS was $0.73 for the third quarter of fiscal 2014, an increase of 14.1 percent from $0.64 for the same period last fiscal year
  • Operating income increased 16.3 percent to $62.6 million for the third quarter of fiscal 2014 compared to $53.9 million for the same period last fiscal year

“Each of our sales channels continued to benefit from consumers increasingly choosing better-for-you natural, organic and specialty foods as illustrated by our second consecutive quarter of net sales growth in excess of $200 million,” said Steven Spinner, president and CEO. "To support these positive growth dynamics and enhance service levels to our customers, in the fourth quarter, we opened our distribution center in Racine, Wis., and we are scheduled to open our Hudson Valley, N.Y., facility in the first quarter of fiscal 2015."

Net sales for the third quarter of fiscal 2014 increased 13.8 percent to $1.78 billion from $1.57 billion in the third quarter of fiscal 2013. The third quarter of fiscal 2014 included incremental net sales of approximately $18.0 million, or 1.2 percent, resulting from the Company's acquisition of Trudeau Foods in the first quarter of fiscal 2014. Gross margin was 16.7 percent for the third quarter of fiscal 2014 compared to 16.8 percent for the third quarter of fiscal 2013. Gross margin for the third quarter of fiscal 2014 was negatively impacted primarily by foreign exchange from the declining value of the Canadian dollar on the Company's Canadian business.

Total operating expenses were 13.2 percent as a percentage of net sales for the third quarter of fiscal 2014, a decrease of 13 basis points compared with the same period last fiscal year. The prior year quarter was negatively impacted by labor action costs of $1.5 million related to the Company's Auburn, Washington facility. Operating expenses for the third quarter of fiscal 2014 included non-recurring costs of approximately $0.9 million related to the startup of the Company's Wisconsin facility in addition to $0.6 million of acquisition costs related to the recently announced agreement to purchase of Tony's Fine Foods.

Operating income increased 16.3 percent, or $8.8 million, to $62.6 million for the third quarter of fiscal 2014 compared to $53.9 million for the third quarter of fiscal 2013. Operating income as a percentage of net sales for the third quarter of fiscal 2014 increased 7 basis points to 3.5 percent compared to the same period last fiscal year.

Net income for the third quarter of fiscal 2014 increased $4.8 million, or 15.1 percent, to $36.4 million, or $0.73 per diluted share, from $31.6 million, or $0.64 per diluted share, for the third quarter of fiscal 2013.

Fiscal 2014 year to date summary
Net sales for the nine months ended May 3, 2014 totaled $5.03 billion, a 13.7 percent increase over the comparable prior fiscal year period. Gross margin decreased 10 basis points to 16.7 percent, compared to the nine months ended April 27, 2013. Gross margin in the first nine months 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 13.5 percent of net sales, total operating expenses for the nine months ended May 3, 2014 were 34 basis points lower than the comparable prior fiscal year period. Total operating expenses increased $66.8 million, or 10.9 percent, to $678.0 million from $611.2 million for the nine months ended April 27, 2013. Total operating expenses for the nine months ended April 27, 2013 included approximately $6.1 million of expenses related to the labor action at the Company's Auburn, Washington facility. Excluding these incremental expenses, operating expenses were $605.1 million or 13.7 percent of net sales.

Operating income for the nine months ended May 3, 2014 increased 23.2 percent, or $30.1 million, to $159.5 million from $129.4 million for the nine months ended April 27, 2013. Operating income as percentage of net sales increased 24 basis points to 3.2 percent compared to the same period last fiscal year.

Net income for the nine months ended May 3, 2014 increased $16.3 million, or 21.6 percent, to $92.1 million, or $1.85 per diluted share, from $75.8 million, or $1.53 per diluted share for the nine months ended April 27, 2013.

“Our additional distribution capacity in New York and Wisconsin and our pending acquisition of Tony's Fine Foods will enable us to build our platform of organic, natural protein and specialty products for new and existing customers throughout North America,” concluded Mr. Spinner.

 

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