Food distributor United Natural Foods Inc., reported that net sales for the fourth quarter of fiscal 2011, ending July 30, totaled $1.16 billion, an increase of 17.2 percent, or $170.2 million, over net sales of $988.5 million for the comparable quarter in fiscal 2010.
Net income for the fourth quarter of fiscal 2011 fell by $0.5 million, or 2.6 percent, to $17.2 million, from $17.6 million for the comparable quarter in fiscal 2010. The decrease is due primarily to expenses of a $6.3 million previously announced restructuring of the company's UNFI Specialty Distribution Services division ("UNFI Specialty"), including some $5.8 million related to the company’s selling of its non-food lines of business.
"Fiscal 2011 was a transitional year for UNFI, as we generated over 20 percent sales growth and record net income," commented Steven Spinner, president and chief executive officer, in a press release. "As we look forward to fiscal 2012, we plan to continue the roll-out of our new warehouse management system, while focusing on increasing service levels and operational productivity."
Will natural retailers remain recession-resilient?
UNFI’s fourth quarter numbers illustrate the industry's resilience to economic cycles, according to Scott Van Winkle, managing director with Canaccord Genuity. “Adjusting for acquisitions and new major account wins, the UNFI results illustrate something in the 10 percent growth range for the industry. Further, UNFI witnessed incremental sales strength in August after its Q4 closed,” he said.
Whole Foods' continued strong sales were a big driver of UNFI’s reported growth, said Bob Burke, principal, Natural Products Consulting. Whole Foods is responsible for about 35 percent of UNFI’s sales.
But sales to independents were equally as robust as its sales to Whole Foods, according to Van Winkle. “In fact, if we exclude the impact of acquisitions over the last year by UNFI (including the acquisition of Whole Foods' Texas and Denver distribution operations), sales to Whole Foods were up about 9 percent while sales to independents were up about 12 percent year-over-year."
UNFI’s projections for a rosy 2012 are probably right on target. “They’ve won some big grocery accounts like Safeway and it seems that they have digested the Millbrook acquisition,” Burke said.
Van Winkle agreed. “Looking into 2012, UNFI's guidance for 2012 sales growth reflects category sales growth in the high single digits with some incremental sales to Safeway [new distribution begins in October] adding 4 percentage points to the growth rate. The guidance illustrates the continued strong category growth,” he said.