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DAYVILLE, Conn. -- Citing such factors as mainstream supermarket channel growth of 24 percent, United Natural Foods, Inc. (UNFI) yesterday posted net sales for its latest quarter of $646.4 million, a rise of $70.8 million, or 12.3 percent, from the $575.6 million reported in the year-ago period.
The latest growth in its first quarter of fiscal 2007, ended Oct. 28, 2006, is the latest in a winning streak for UNFI. On top of 17 percent comparable-sales growth last year, UNFI's two-year comps have increased nearly 30 percent, said the company's president and c.e.o., Michael Funk, during a conference call yesterday.
Also, mainstream supermarkets now make up 15.8 percent of UNFI's business, he noted.
The distributor's net income for the quarter was $12.4 million, or 29 cents per diluted share, as opposed to $7.7 million, or 18 cents per diluted share, including special items, last year. There were no special items for the first quarter of fiscal 2007.
Expenses during the quarter were adversely affected by an operating loss of $0.6 million related to the Albert's Organics division's facility in Greenwood, Ind. As a result, the company closed this facility and began serving the market from the division's Minneapolis facility at the end of last month.
UNFI said it has expanded its seven-year primary distribution agreement with Whole Foods, and will become the primary wholesale natural grocery distributor for the chain's Southern Pacific region, which includes Southern California, Arizona, and Southern Nevada, in January 2007. When the new Whole Foods business is combined with other business gained during the 2007 first quarter, UNFI expects to generate incremental revenues of about $47.0 million to $52.0 million during fiscal 2007, and about $95.0 million to $105.0 million on an annual basis.
"We have confidence in our ability to continue to execute our sales and operating strategies throughout the rest of fiscal 2007," said Funk. "Sales growth in our supermarket channel continues to be quite strong. Coupled with our expanded Whole Foods relationship in the Southern Pacific region of the United States and a strong pipeline of new Whole Foods stores expected to open in the near future, we expect to realize continued sales momentum in this business channel."
During the conference call, Funk said that the recent closure of eight Wild Oats stores had cost UNFI about $7 million in annual sales, but the retailer's four recent store openings had greatly offset that loss.
"Over the next 12 to 21 months, we look forward to further building out our infrastructure by opening new facilities in the Pacific Northwest, Florida, and Texas markets, which we originally announced back in August. These new facilities will significantly reduce our annual miles traveled in those regions. In addition, we plan to continue to move forward with our installation of warehouse technologies in our existing facilities. Combined with our commitment to increase sales of our branded products to 5 percent of revenues by the end of fiscal 2008, we remain optimistic regarding our future growth prospects."
Regarding the growth of the branded products division, which currently accounts for 3.5 percent of total company revenues, Funk said during the conference call that UNFI was "looking at small branded acquisition opportunities with emerging companies," adding that the distributor hoped to conclude some deals in this area over the next two quarters.
UNFI carries and distributes over 40,000 products to more than 18,000 customers across the country. The company serves a wide variety of retail formats, among them conventional supermarket chains, natural product superstores, independent retail operators, and the foodservice channel.