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United Natural Foods Inc. (UNFI) has signed an asset purchase agreement with L&R Distributors Inc., a national distributor of nonfoods and general merchandise, to divest its nonfoods and general merchandise lines of business. According to Providence, R.I.-based UNFI, the strategic transaction would enable it to concentrate on its core business of the distribution of natural, organic and specialty foods and products. The wholesaler entered the nonfoods and general merchandise businesses, including cosmetics, seasonal products, conventional health-and-beauty products, and hard goods, when it acquired Millbrook Distribution Services Inc. in November 2007. Terms of the transaction were not revealed.
After the deal closes, which is expected to occur in UNFI’s first quarter of fiscal 2012, the company will cease operations at its Harrison, Ark., facility, with all specialty food products transferred to other distribution centers across the United States. UNFI added it would work closely with Brooklyn, N.Y.-based L&R Distributors and current nonfoods and general merchandise customers to ensure a smooth transition of service.
As a result of this transaction, UNFI expects to incur associated restructuring and impairment charges of about $11.0 million to $12.5 million during the fourth quarter of fiscal 2011 and the first quarter of fiscal 2012. The company has also revised its earnings per share guidance for fiscal 2011 to a range of $1.55 to $1.59 per diluted share, to reflect the impact of the sale and the associated fourth-quarter charges.
“After thorough analysis, we came to the conclusion that general merchandise and nonfood products are not strategic to our business,” explained UNFI president and CEO Steven Spinner. “By selling these non-core product lines and partnering with L&R Distributors to ensure a smooth transition for these customers, we will be positioned to completely focus our efforts on growing and expanding our natural, organic and specialty lines of business, while continuing to provide the highest level of service to our customers."
UNFI carries and distributes more than 60,000 products to more than 23,000 customer locations throughout the United States and Canada. The company serves a wide variety of retail formats, including conventional supermarket chains, natural product superstores, independent retail operators and the foodservice channel.