United Natural (UNFI) Reports Q1 Loss, Lags Sales Estimate
United Natural Foods, Inc. UNFI posted first-quarter fiscal 2024 results, wherein the company delivered a narrower-than-expected adjusted loss per share. However, the top line fell short of the Zacks Consensus Estimate while increasing year over year.
Results benefited from improved operational execution, which generated savings from value-creation initiatives. However, declines from procurement gains as a result of reduced levels of inflation were a concern. Management reaffirmed the fiscal 2024 outlook for net sales, adjusted EBITDA and adjusted earnings.
United Natural Foods, Inc. Price, Consensus and EPS Surprise
United Natural Foods, Inc. price-consensus-eps-surprise-chart | United Natural Foods, Inc. Quote
Quarter in Detail
United Natural’s adjusted loss came in at 4 cents per share against earnings of $1.13 reported in the year-ago quarter. The metric was narrower than the Zacks Consensus Estimate of a loss of 26 cents.
Net sales inched up 0.3% to $7,552 million, missing the Zacks Consensus Estimate of $7,563.7 million. The year-over-year upside can be attributed to gains from inflation and new business with existing customers, mainly in the Supernatural channel. However, a decline in units sold was a downside.
Chains, Independent retailers and Retail witnessed sales decline of 1.2%, 2.5% and 1.1%, respectively. Supernatural and Other channels rose 6.5% and 1.7%, respectively.
United Natural’s gross profit fell 6% to $1,030 million. Gross profit was anticipated to decline 8% to $1,007.9 million. Excluding the non-cash LIFO charge in both periods, gross profit dropped 7.2%. Gross margin (excluding non-cash LIFO charges) of 13.7% contracted from 14.8% in the year-ago quarter. The downside can mainly be attributed to reduced levels of procurement gains stemming from decelerating inflation.
Operating expenses were $1,023 million compared with $1,000 million reported in the year-ago quarter. As a percentage of sales, the metric came in at 13.5%, higher than 13.3% reported in the year-ago quarter. Investments in the transformation initiatives were a downside. We had expected the metric to come in at 13.1% in the reported quarter.
Adjusted EBITDA came in at $117 million, down 43.5% from $207 million reported in the year-ago quarter. We had expected adjusted EBITDA to come in at $125 million, down 39.6% year over year.
Other Updates
The Zacks Rank #3 (Hold) company ended the quarter with total liquidity of nearly $1.29 billion, including cash of nearly $37 million and a borrowing capacity of about $1.25 billion under the company’s asset-backed lending facility. Total outstanding debt (net of cash) was $2.29 billion.
Net cash used in operating activities during the fiscal first quarter was $254 million.
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Fiscal 2024 Guidance
For the fiscal 2024, the company anticipates net sales in the range of $30.9-$31.5 billion. The company expects adjusted EBITDA in the $450-$550 million range. Net loss is envisioned to be $46-$120 million compared with $36-$110 million expected earlier. The company still anticipates the fiscal 2024 bottom line to be between a loss of 88 cents per share and earnings of 38 cents. The company expects capital expenditures of nearly $400 million for fiscal 2024.
UNFI’s stock has lost 16.1% in the past three months compared with the industry’s decline of 2.6%.
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