United Natural Foods, Inc.
(
UNFI
) delivered better-than-expected third quarter 2012 earnings of 59
cents per share, exceeding the Zacks Consensus Estimate by 3 cents,
driven by better-than-expected top line growth. The earnings also
surpassed the prior-year earnings by 22.9% at 48 cents per
share.
Net sales for the quarter increased 15.3% year over year to
$1.39 billion, exceeding the Zacks Consensus Estimate of $1.35
billion. The results were driven by continuous demand for United
Natural's food.
Gross margin plummeted 53 basis points to 17.6% from the
year-ago period, which was primarily the result of continued shift
in customer mix to the supermarket channel.
However, operating margin climbed 27 basis points to 3.5% in the
reported quarter, on the back of productivity initiatives taken up
by the company and reduced operating costs as a percentage of
sales.
Guidance
Based on the strong third quarter results and the current
environment, United Natural expects an increase of about 14.3% to
15.3% in the total sales for fiscal 2012 to reach in the range of
$5.18 billion to $5.22 billion. The sales guidance increased from
the previous target of $5.11 billion to $5.17 billion.
In addition, the company expects its fiscal 2012 reported
earnings guidance to increase to a range of $1.84 - $1.88, compared
with the guidance range of $1.79 - $1.86 per share provided
previously. The increase in guidance was driven by robust top-line
growth and increase in operating performance. The raised guidance
includes approximately $6.8 - $7.0 million operating expenses for
fiscal 2012 related to the previously announced divestiture of
conventional non-foods and general merchandise lines of business
and the start-up expenses associated with the new national
customer.
Excluding these expenses, United Natural expects its fiscal 2012
operating earnings to come in the range of around $1.92 - $1.96 per
share, reflecting an increase of approximately 14.3% to 16.7% over
fiscal 2011 operating earnings of $1.68 per share.
However, the company has lowered its guidance for capital
expenditure for fiscal 2012. United Natural now expects capital
expenditure in the range of $35.0 - $40.0 million, compared with
the previous guidance of $47.0 - $52.0 million.
United Natural carries and distributes more than 60,000 products
to more than 23,000 customer locations throughout U.S. and Canada.
The company also serves a wide variety of retail formats including
conventional supermarket chains, natural product superstores,
independent retail operators and the food service channel.
The company, which competes with
Nash Finch Co.
(
NAFC
), currently holds a Zacks #3 Rank (short term 'Hold' rating). On a
long-term basis, we provide a Neutral recommendation on the
stock.
NASH FINCH CO (NAFC): Free Stock Analysis
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