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United Natural Beats Earnings; Revises FY View

Zacks Equity Research

Specialty foods distributor, United Natural Foods, Inc. (UNFI) delivered third quarter fiscal 2013 earnings of 64 cents per share, which beat the Zacks Consensus Estimate of 63 cents by 1.6%. Earnings also increased 8.5% year on year from 59 cents, driven by top-line growth.

Revenue and Margin Details

Net sales for the quarter increased 12.8% year over year to $1.57 billion compared with $1.39 billion in the prior-year quarter. Net sales marginally beat the Zacks Consensus Estimate of $1.56 billion. The results were driven by continuous increase in demand for the company’s organic and natural food products.

Gross margin plummeted 83 basis points to 16.8% from the year-ago period, primarily due to increase in freight expenses. In addition, the decline was due to the shift in customer mix to lower-margin conventional supermarkets, which has been negatively impacting the company’s gross margins over the past several quarters.

Operating margin declined 6 basis points to 3.4% in the reported quarter due to higher operating expenses.


Based on strong third quarter performance and a positive outlook for the rest of the fiscal, United Natural has raised its net sales guidance to a range of $6.03 billion – $6.06 billion, from the previous range of $5.88 billion - $5.98 billion announced in Sep 2011. The new sales guidance represents an increase of 15.2% to 15.7% over fiscal 2012.

United Natural has narrowed its adjusted earnings guidance in the range of $2.15 to $2.17 per share, compared with the previous guidance of approximately $2.15 to $2.21 per share. The new earnings guidance represents an increase of approximately 10.8% to 11.9% over fiscal 2012 adjusted earnings of $1.94 per share.

United Natural currently holds a Zacks Rank #3 (Hold). Other stocks in the food industry worth considering are Green Mountain Coffee Roasters, Inc (GMCR), Natural Grocers by Vitamin Cotta (NGVC) and Core Mark Holding Co. Inc (CORE). While Green Mountain holds a Zacks Rank #1 (Strong Buy), Natural Grocers and Core Mark hold a Zacks Rank #2 (Buy).

Read the Full Research Report on GMCR

Read the Full Research Report on CORE

Read the Full Research Report on NGVC

Read the Full Research Report on UNFI

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