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UNFI projects 12% sales jump for next quarter

CEO Steven Spinner: ‘We remain fully committed to keeping supermarket shelves across North America stocked’

Russell Redman

May 13, 2020

3 Min Read
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“Customer demand for both our natural and conventional products surged early in our fiscal third quarter and remains elevated," said UNFI CEO Steven Spinner.UNFI

United Natural Foods Inc. (UNFI) estimates a 12% net sales gain and a more than 50% surge in net income for its fiscal 2020 third quarter, driven by increased business amid the coronavirus pandemic.

In preliminary results released late yesterday, UNFI forecasts sales of $6.67 billion for the 13-week quarter ended May 2, up 12% from $5.96 billion a year earlier.

Net income is projected to come in at $88 million, a gain of 54% from $57 million a year ago. GAAP net earnings per share (diluted) are pegged at $1.60, compared with $1.12 in the 2019 quarter. Adjusted EPS (diluted) is estimated at $1.40, up from 61 cents in the prior-year period. Similarly, adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) is expected to climb 32% to $222 million from $168 million.

Analysts, on average, had projected third-quarter adjusted EPS at 58 cents, with estimates ranging from 31 cents to $1.13, according to Refinitiv/Thomson Reuters.

For the fiscal 2020 second quarter, UNFI reported flat net sales and a GAAP net loss of $31 million, or 57 cents per diluted share. Adjusted EPS was 32 cents.

UNFI said preliminary third-quarter results reflect strong customer demand driven by the response to COVID-19, which has allowed the Providence, R.I.-based grocery distributor to leverage fixed costs and capitalize on its synergy and integration efforts from the Supervalu acquisition. Also contributing to the higher performance were the Cub Foods and Shoppers supermarket banners, the company said, adding that results also include “substantial incremental costs,” such as for temporary pandemic-related worker incentives and extra safety measures at distribution centers and retail stores.

Related:UNFI offers advice to food suppliers during COVID-19 pandemic

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“Customer demand for both our natural and conventional products surged early in our fiscal third quarter and remains elevated, illustrating the value inherent in our strategy to build a distribution network capable of servicing natural, conventional and fresh perimeter products at scale,” Chairman and CEO Steven Spinner (left) said in a statement. “That demand, along with our ongoing synergy and integration initiatives, contributed to our strong preliminary third-quarter results. We remain fully committed to keeping supermarket shelves across North America stocked and serving our customers and communities when they need us most, while prioritizing the safety of our teams who are working with exceptional dedication.”

In mid-March, UNFI instituted a $2-per-hour temporary “state of emergency” bonus for labor associates and drivers on top of their regular wages and overtime hours. The company said it hired more than 2,000 new associates in March and April and continues to recruit more associates to meet the escalating demand. In addition, the distributor has provided attendance flexibility, enabling employees to stay home when ill or take care of household family members impacted by the virus.

Related:Q&A: UNFI President Chris Testa wants to help grocers find ‘the sweet spot’

“I am incredibly proud of the entire UNFI team, especially our frontline distribution center, transportation and retail associates, who have been working diligently to fulfill UNFI’s role as a critical link in the North American food supply chain during this unprecedented time,” Spinner said. “The safety of our team has always been and will continue to be at the forefront of everything we do.”

UNFI said it’s withdrawing its previously issued fiscal 2020 guidance based on the strength of its year-to-date financial performance. The company plans to release an updated outlook when it reports final third quarter results in early June.

In a research note Tuesday evening, Jefferies analyst Christopher Mandeville wrote, “After market close, UNFI pre-announced its third-quarter 2020 results, offering adjusted EBITDA/EPS of $222 million/$1.40 versus $168 million/$0.65 consensus. The wide beat comes as a byproduct of COVID-19 forcing a material shift in consumption spend to the food-at-home (from food-away-from-home) channel, leading to 12% sales growth versus 0% to 2% previous trends.”

He added, “Incremental costs were incurred during the quarter to boost pay and ensure employee safety. However, the notable sales lift, a $58 million EBITDA contribution (up $24 million year over year), continued integration efforts with Supervalu and ongoing synergies realization (contribution not disclosed) more than offset the added expenses.”

For our most up-to-date coverage, visit the coronavirus homepage.

About the Author

Russell Redman

Senior Editor
Supermarket News

Russell Redman has served as senior editor at Supermarket News since April 2018, his second tour with the publication. In his current role, he handles daily news coverage for the SN website and contributes news and features for the print magazine, as well as participates in special projects, podcasts and webinars and attends industry events. Russ joined SN from Racher Press Inc.’s Chain Drug Review and Mass Market Retailers magazines, where he served as desk/online editor for more than nine years, covering the food/drug/mass retail sector. 

Russell Redman’s more than 30 years of experience in journalism span a range of editorial manager, editor, reporter/writer and digital roles at a variety of publications and websites covering a breadth of industries, including retailing, pharmacy/health care, IT, digital home, financial technology, financial services, real estate/commercial property, pro audio/video and film. He started his career in 1989 as a local news reporter and editor, covering community news and politics in Long Island, N.Y. His background also includes an earlier stint at Supermarket News as center store editor and then financial editor in the mid-1990s. Russ holds a B.A. in journalism (minor in political science) from Hofstra University, where he also earned a certificate in digital/social media marketing in November 2016.

Russell Redman’s experience:

Supermarket News - Informa
Senior Editor 
April 2018 - present

Chain Drug Review/Mass Market Retailers - Racher Press
Desk/Online Editor 
Sept. 2008 - March 2018

CRN magazine - CMP Media
Managing Editor
May 2000 - June 2007

Bank Systems & Technology - Miller Freeman
Executive Editor/Managing Editor
Dec. 1996 - May 2000

Supermarket News - Fairchild Publications
Financial Editor/Associate Editor
April 1995 - Dec. 1996 

Shopping Centers Today Magazine - ICSC 
Desk Editor/Assistant Editor
Dec. 1992 - April 1995

Testa Communications
Assistant Editor/Contributing Editor (Music & Sound Retailer, Post, Producer, Sound & Communications and DJ Times magazines)
Jan. 1991 - Dec. 1992 

American Banker/Bond Buyer
Copy Editor
Oct. 1990 - Jan. 1991 

This Week newspaper - Chanry Communications
Reporter/Editor
May 1989 - July 1990

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