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United Natural Foods, Inc. Message Board

  • andevenabs andevenabs Jun 15, 2005 12:59 PM Flag

    sales mix from 10K

    sales mix numbers YoY:

    Independently owned natural products retailers :46%......................47%
    Supernatural chains: 37%............34%
    SuperMarket: 13%....................14%
    Other: 4%............................5%

    the increase to 37% from 34% cannot explain all of the margin compression, this is a 3% re-allocation of the "pie" unless of course, this new added business is a loss-leader which is particularly troublesome.

    what do you all think?

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    • I don;t think you can gleen anything telling in the sales mix. What clearly stand out is the sg&a costs. I beleive if you read the 10q you'll find they explain the resean behind the increase. They also sight increased fuel costs as having a 22 basis point effect.

      All in all, it is given that as their sales growth moves into the major's, they will see some mrgn erosion. However, as is the case for almost all that sell to the major, it should be made up with volume

      • 2 Replies to hawaiiretireo
      • SG&A is another problem potentially, as it's going up faster than incremental sales growth.

        Let us learn from the mistakes that occurred at Ahold, Alliant, and others, all of which were teetering on bankruptcy (some did)

        Wholesale food distribution is a tough business as evidenced by the huge volumes and razor thin margin at Sysco.

        I'd like to see the margin compression stop and hold steady for a few quarters before a buy-in.

      • Your assumption that sales to majors will be at lower margins for UNFI are incorrect. They pay list prices and are given ongoing deals from manufacturers that are specific to each retailer. The sales to majors are made through many stores in a chain with small amounts of product to each store. The sales to Whole Foods are multiple pallets and even truckloads to each store. The sales to supermarkets are partial pallets to each store... It's still good business, it's just different...

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