Specialty foods distributor, United Natural Foods,
Inc. ( UNFI ) delivered
second-quarter fiscal 2013 adjusted earnings (excluding one-time
labor expenses) of 50 cents per share, which were in-line with the
Zacks Consensus Estimate. Earnings increased 11.1% year on year
from 45 cents. The upside was driven by top-line growth and
improved operational efficiency.
Revenue and Margin Details
Net sales for the quarter increased 12.3% year over year to
$1.45 billion compared with $1.29 billion in the prior-year
quarter. Net sales lagged the Zacks Consensus Estimate of $1.46
billion. The results were driven by continuous increase in demand
for the company's organic and natural food products.
Gross profit increased 8.3% to $241.7 million while gross margin
plummeted 62 basis points to 16.7% from the year-ago period,
primarily due to logistics inefficiencies. The company has been
facing a decline in gross margins over the past several quarters
due to the shift in customer mix to lower-margin conventional
supermarkets.
However, adjusted operating profit (excluding one-time expense)
jumped 13.6% to $42.6 million whereas adjusted operating margin
increased 4 basis points to 2.9% in the reported quarter. The
upside was the result of productivity initiatives taken up by the
company and reduced operating expense as a percentage of sales.
Guidance
Based on its decent first half of fiscal 2013 performance and
continued demand for organic products, United Natural expects
adjusted earnings in the range of approximately $2.15 to $2.21 per
share, which represents an increase of approximately 10.8% to 13.9%
over fiscal 2012 adjusted earnings of $1.94 per share.
Going ahead, United Natural looks for further opportunities to
enhance its position within the natural and organic industry in the
U.S. and Canada and to increase its market share in the specialty
products industry.
Moreover, United Natural's strategic plan including the rollout
of a national warehouse management and procurement system upgrade
is expected to reduce operating expenses to offset lower gross
margins in the upcoming quarters.
United Natural currently holds a Zacks Rank #4 (Sell). Other
retail/wholesale stocks worth considering are Green
Mountain Coffee Roasters, Inc ( GMCR ),
Natural Grocers By Vitamin Cotta ( NGVC ) and The
TJX Companies Inc ( TJX ), where Green
Mountain holds a Zacks Rank #1 (Strong Buy), while Natural Grocers
and TJX are holding a Zacks Rank #2 (Buy).
GREEN MTN COFFE (GMCR): Free Stock Analysis
ReportNATURAL GROCERS (NGVC): Free Stock Analysis
ReportTJX COS INC NEW (TJX): Free Stock Analysis
ReportUTD NATURAL FDS (UNFI): Free Stock Analysis
ReportTo read this article on Zacks.com click here.Zacks Investment
Research