United Natural Foods Inc. (UNFI) topped Wall Street’s earnings forecast and turned in across-the-board net sales gains for its fiscal 2022 third quarter, after cycling pandemic-fueled sales increases a year ago.
For the quarter ended April 30, net sales totaled $7.24 billion, up 9.2% from $6.63 billion a year earlier, Providence, R.I.-based UNFI said Tuesday. The grocery distributor had reported a 5.9% net sales decrease in the fiscal 2021 quarter, though results were up 6.7% on a two-year stack.
The Independent business segment (retail customers with fewer than 10 stores) posted the strongest growth in the third quarter, with net sales jumping 14.6% to $1.83 billion. Seeing nearly the same uptick was the Supernatural unit — consisting of Amazon-owned Whole Foods Market — where net sales climbed 14.1% to $1.47 billion. UNFI’s Supernatural segment was the only business to generate a net sales increase (+0.6%) in the prior-year period.
UNFI’s Supernatural unit — consisting of Whole Foods Market — recorded a Q3 net sales gain of 14.1%, just behind the 14.6% uptick generated by the distributor’s Independent grocery channel.
UNFI’s largest business unit, Chains (retail customers with more than 10 stores), also tallied solid Q3 growth as net sales advanced 5.2% to $3.11 billion. At the Other unit — encompassing international customers outside Canada, foodservice, e-commerce, conventional military and other business — net sales rose 7.9% to $625 million.
Meanwhile, net sales at UNFI’s Retail segment — Cub Foods and Shoppers supermarket chains — edged up 2% to $602 million. Currently, the business includes 53 Cub Foods and 21 Shoppers stores.
“Our third-quarter performance further demonstrates UNFI’s agility and its focus on servicing customers despite a challenging operating environment. It’s apparent that our ‘Fuel the Future’ strategy is working and beginning to benefit our customers,” UNFI CEO Sandy Douglas said in a statement. “As we look towards a successful end to our fiscal year, we continue to make progress in simplifying our business and focusing resources on the most important areas that create value for our customers, suppliers and shareholders.”
On the earnings side, UNFI reported fiscal 2022 third-quarter net income (attributable to the company) of $67 million, or $1.10 per diluted share, compared with $48 million, or 80 cents per diluted share, a year ago. The company said net earnings for the 2022 quarter reflect included an $88 million pretax gain on sale of assets related to a distribution center, a $72 million pretax LIFO charge, and $8 million of pretax restructuring, acquisition and integration expenses.
On an adjusted basis, UNFI’s net income per diluted share for Q3 2022 came in at $1.10 versus $1.00 a year earlier. Analysts, on average, had projected adjusted EPS of 97 cents, with estimates ranging from 86 cents to $1.05, according to Refinitiv.
Looking ahead, UNFI updated its full-year fiscal 2022 (ending July 30) guidance, raising its estimates for reported EPS to $3.75 to $4.00 (from $3.60 to $3.90) and adjusted EPS to $4.65 to $.90 (from $4,20 to $4.50). Analysts’ average estimate, before UNFI’s earnings report today, was for adjusted EPS of $4.15, with estimates running from $4.00 to $4.34, according to Refinitiv.
UNFI lifted its net sales forecast at the top and bottom ends to between $28.8 billion and $29.1 billion (from $27.8 billion to $28.3 billion). Adjusted EBITDA is pegged at $810 million to $830 million, up from the previous outlook of $785 million to $815 million.