PROVIDENCE, R.I. — Strong sales trends of natural, organic and specialty product, particularly through independent retailers, helped drive the top line at United Natural Foods Inc. here in the fourth fiscal quarter, the company said last week.
Profits for the quarter fell, however, because of about $6.3 million in one-time restructuring charges related to the divestiture of its nonfood specialty business. Net income of $17.2 million for the quarter, which ended July 30, was down 2.6%, while sales were up 17.2%, to $1.16 billion.
Sales in the independent channel, which represented 38% of the company's volume in the fourth quarter, were up 14.9% over the year-ago period, an acceleration from slower growth in previous quarters.
“We were very pleased with the return to growth in the independent channel, and we think that it's a combination of just the overall economic environment for independents improving, increased demand from what I typically call the crossover shoppers, who are shopping more in the independents,” said Steven Spinner, president and chief executive officer, in a conference call with analysts. “Independents tend to be extremely innovative. I think maybe it just took them a little bit longer to adjust to the changes in the economic environment, but we were very, very pleased.”
He also said the trend toward accelerating sales growth is continuing in the first quarter of the current fiscal year across all channels.
“We're very happy that the trend seems to be continuing,” Spinner said. “We haven't seen a lot of slippage in our overall sales growth. As a matter of fact, sales trends since the end of the fourth quarter are actually getting slightly better. So overall, those things are very positive.”
Sales to the supernatural channel increased by 19.9% over the prior year's fourth quarter and represented 35% of total sales, the company said, and sales to the supermarket channel were up 23.6% over year-ago levels, representing about 22% of fourth-quarter sales. The foodservice channel grew by 27% over the prior year and represents about 3% of sales.
The company said inflation was nearly 3% in the fourth quarter, about double the level of the third quarter.
“I think that we have some confidence that over the next 12 months to 18 months, inflation will probably be in the 3% to 4% range,” Spinner said. “We don't believe that it's going to go north of 4%.”
He said inflation in that range was generally manageable for the wholesaler, as those increases can be passed on relatively smoothly.
For the year, UNFI said net income rose about 10.9%, to $76.7 million, on a 20.6% increase in sales, to $4.53 billion.
As previously reported, UNFI reached an agreement to begin supplying Pleasanton, Calif.-based Safeway with natural, organic and specialty product, beginning this October. That is expected to add about 4% to UNFI's sales volume.
For fiscal 2012, the company said it expects net sales in the range of $5 billion to $5.1 billion.