UNFI Gets Sales Boost From Safeway

PROVIDENCE, R.I. — United Natural Foods Inc. [3] here on Tuesday said demand for specialty and organic foods — particularly among supermarkets and large specialty chains — led to a 15.5% sales gain in the fiscal second quarter.

UNFI totaled sales of $1.29 billion for the period, which ended Jan. 28. Net income for the quarter increased 17.5% to $22 million, despite gross margins declining by 50 basis points from the same period last year as a result of a greater mix of sales to conventional supermarkets. Sales to supermarkets in the quarter increased by 32%, mainly as a result of a full quarter of sales to Safeway [4], which began sourcing natural and organics from UNFI late last year.

Conventional supermarkets now comprise 25% of UNFI’s total sales, Mark Shamber, chief financial officer of UNFI, said.

The strong sales trend — despite concerns over rising fuel and inflation — prompted the company Tuesday to increase its projected sales for the fiscal year to a range of $5.1 billion to $5.2 billion, from earlier expectations of $5 billion to $5.1 billion. It also raised the lower end of its annual earnings estimates by a penny per share.

Steven Spinner [5], chief executive officer of UNFI, in a conference call Tuesday said that “crossover” customers — who buy a mix of organic and conventional goods — are increasing sales at a rapid pace and responding to offers such as organic produce in larger, less expensive pack sizes, as well as organic dairy and grains.

“The rate of increase for crossover customers that buy both organic and conventional is increasing at a very nice pace,” Spinner said.