United Natural (UNFI) Poised on Transformation Initiatives
United Natural Foods, Inc. UNFI is focusing on operational improvements and strategic initiatives to fuel efficiency and profitability. Despite facing challenges in the retail food space, the company is concentrating on short-term and long-term transformation efforts.
United Natural has witnessed a consistent decline in inflation rates. In the first quarter of fiscal 2024, the company pointed out a significant reduction in inflation by 200 basis points from the fourth quarter of fiscal 2023. This trend suggests a slowdown in the rate of price hikes.
On the strategic front, UNFI has made progress in managing shrink, improving supply-chain stability and realizing value-creation initiatives, which are expected to deliver $150 million in operating efficiencies in fiscal 2024. The company is also focusing on network optimization and expanding automation systems, including consolidating distribution centers.
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E-commerce Efforts Bode Well
United Natural gains from its robust e-commerce operations, bolstered by enhanced digital offerings. Many of its independent and chain channels are now equipped with e-commerce capabilities to serve its clientele. Additionally, UNFI provides essential digital platforms and support to meet customer needs.
The company has been strongly working on empowering online sales. It started a program called UNFI Insights, a value-added supplier initiative. The company also began Community Marketplace, an online platform for businesses. This platform is specially made for new and growing brands, helping them reach more customers through United Natural's network.
Retail Unit Hurdles
In the first quarter of fiscal 2024, United Natural experienced a modest drop in its retail business segment sales. The retail segment saw a 1.1% decline in sales from the previous year primarily due to broader economic and industry challenges. These challenges encompass various factors, such as shifts in consumer behavior, heightened competition and economic strains that are influencing consumer spending habits.
Shares of this Zacks Rank #3 (Hold) company have lost 18% in the past three months compared with the industry’s decline of 1.2%.
Three Solid Picks
We have highlighted three better-ranked stocks, namely MGP Ingredients, Inc. MGPI, Celsius Holdings CELH and The Kraft Heinz Company KHC.
MGP Ingredients produces and markets ingredients and distillery products to the packaged goods industry. The company currently has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for MGP Ingredients’ current financial-year sales and EPS suggests growth of 6% and 14.2%, respectively, from the year-ago reported figures. MGPI has a trailing four-quarter earnings surprise of 16.2%, on average.
Celsius Holdings, which offers functional drinks and liquid supplements, currently carries a Zacks Rank #2. CELH delivered an earnings surprise of 81.6% in the third quarter of 2023.
The Zacks Consensus Estimate for Celsius Holdings’ current financial-year sales and earnings suggests growth of 98.5% and 185.2%, respectively, from the year-ago reported numbers. CELH has a trailing four-quarter earnings surprise of 110.9%, on average.
The Kraft Heinz Company is one of the largest consumer packaged food and beverage companies. It currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for The Kraft Heinz Company’s current financial-year sales and earnings suggests growth of 1.1% and 6.5%, respectively, from the year-ago reported numbers. KHC has a trailing four-quarter earnings surprise of 9.9%, on average.
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United Natural Foods, Inc. (UNFI) : Free Stock Analysis Report
Kraft Heinz Company (KHC) : Free Stock Analysis Report
MGP Ingredients, Inc. (MGPI) : Free Stock Analysis Report
Celsius Holdings Inc. (CELH) : Free Stock Analysis Report
