Specialty foods distributor,
United Natural Foods, Inc.
) delivered fourth quarter fiscal 2013 earnings of 65 cents per
share, which beat the Zacks Consensus Estimate of 60 cents by
8.3%. Earnings surged 27.5% year on year from 51 cents, driven by
solid top-line growth and improved gross margin.
Revenue and Margin Details
Net sales for the quarter increased 22.2% year over year to
$1.64 billion compared with $1.34 billion in the prior-year
quarter. Net sales marginally beat the Zacks Consensus Estimate
of $1.63 billion. The results were driven by continuous increase
in demand for the company's organic and natural food products and
one additional week in the fourth quarter. Excluding that
additional week, sales improved 13.4% on a year-over-year
Gross margin improved 11 basis points to 17.3% from the
year-ago period, primarily due to improvements in purchasing and
logistics efficiencies. The improvements more than offset the
negative impact of the shift in customer mix to lower-margin
conventional supermarkets, which has been affecting the company's
gross margins over the past several quarters.
The company's productivity initiatives helped reduce operating
expense ratio in the fourth quarter. As a result, operating
income margin increased 22 basis points to 3.4% in the reported
Fiscal 2013 Results
In fiscal 2013, United Natural posted adjusted earnings of
$2.20 per share, which increased 13.4% year on year from $1.94
per share and beat the Zacks Consensus Estimate of $2.16 by 1.9%.
The increase in earnings was driven by top-line growth.
Net sales also climbed 15.8% year over year to $6.06 billion
compared with $1.34 billion in the prior-year quarter. Net sales
beat the Zacks Consensus Estimate of $6.05 billion. Excluding the
additional week in the fourth quarter, sales improved 13.6% on a
Gross margin however declined 59 basis points from the
year-ago period to 16.9%, primarily due to increased freight
expenses as well as higher cost of maintenance of stocks. The
company's margins also suffered due to the shift in customer mix
to lower-margin conventional supermarkets. Operating margin
increased 10 basis points to 3.1% in fiscal 2013, owing to
reduced operating expenses.
United Natural provided earnings and sales guidance for fiscal
2014. The company expects net sales in the range of approximately
$6.65 to $6.78 billion, an increase of approximately 11.8% to
14.0% over fiscal 2013 (excluding the additional week). The
company also expects reported earnings for fiscal 2014 in the
range of approximately $2.40 to $2.50 per share, an increase of
approximately 10.1% to 14.7% over fiscal 2013 reported earnings
of $2.18 per share.
United Natural currently holds a Zacks Rank #2 (Buy). Other
stocks in the food industry worth considering are
Green Mountain Coffee Roasters, Inc
Dole Food Co. Inc.
Pinnacle Foods Inc
). While Green Mountain holds a Zacks Rank #1 (Strong Buy), Dole
Food and Pinnacle Foods hold a Zacks Rank #2 (Buy).
DOLE FOOD CO (DOLE): Free Stock Analysis
GREEN MTN COFFE (GMCR): Free Stock Analysis
PINNACLE FOODS (PF): Free Stock Analysis
UTD NATURAL FDS (UNFI): Free Stock Analysis
To read this article on Zacks.com click here.