United Natural Foods Inc. on Thursday said sales improved by 24.4% in the fiscal first quarter, helped along by the acquisition of Tony’s Fine Foods and a continuing health and wellness trend that’s getting more of the distributor’s items into more stores.
“Natural and organic products were once viewed as unique and differentiated products for a narrow band of consumers and retailers,” UNFI CEO Steven Spinner said in a conference call discussing results for the quarter. “Today, our products are demanded by consumers across North America which has led to the adoption of these items across every channel.
“This rapid adoption rate has led to new opportunities for UNFI as we operate the broadest network of companies specializing in natural, organic and specialty products,” he continued. “Consumers continue to demonstrate a desire to seek a healthier, know-your-ingredients lifestyle. This results an increased shelf space across a growing number of retailers which ultimately drives demand to UNFI.”
Spinner said the company expects to build out its share in the gourmet ethnic and e-commerce channels in the coming years. The former, including Italian, Asian, Kosher and Hispanic products, is a $5 billion sales opportunity, Spinner said.
In e-commerce, “our goal is to offer retailers over 15,000 SKUs across gluten-free, organic, personal care, supplements, lifestyle, and other important lines,” Spinner added. “Given our proximity to the retailer and the consumer, our hope is to be the e-commerce solution for retailers and business-to-business e-commerce providers.”
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For the quarter, which ended Nov. 1, sales of $2 billion increased by 24.4%, or 10% when adjusted for the acquisitions of specialty suppliers Tony’s Fine Foods and Trudeau Foods. Net income increased by 19% to $5.3 million.
Earnings were slightly ahead of analyst consensus and driven by sales. Gross margin as a percent of sales was down 92 basis points to 16% for the quarter, negatively impacted by sales dilution resulting from the Tony’s acquisition and by increased freight costs and exchange rates impacting UNFI’s profits in Canada.
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