United Natural Foods Post-Earnings Coverage

LONDON, UK / ACCESSWIRE / June 7, 2016 / ActiveWallSt.com announces its post-earnings coverage on United Natural Foods, Inc. (NASDAQ: UNFI). The company announced its Q3 FY16 financial results on Monday, June 06, 2016. For Q3 FY16, the company reported net income of $38.27 million, or $0.76 per share, as compared to net income of $41.75 million, or $0.83 per share, in Q3 FY15, beating the analyst’s consensus estimate of $0.66 by $0.10. The Rhode Island headquartered company reported revenue of $2.13 billion up 0.8% on y-o-y basis, slightly missing analyst’s consensus estimates of $2.16 billion. Register with us now for your free membership and see our complete reports on these equities at:

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Earnings Breakdown

For Q3 FY16, United Natural reported gross margin of 15.1%, a drop of 29 basis points on y-o-y basis. The primary reason for a decline in gross margins was competitive pricing pressures, shifting the product mix towards lower margin categories, reduction in fuel surcharges, and a decline in promotional activity from suppliers. For Q3 FY16, the company’s total operating expenses were 12.0% as percentage of net sales, a decrease of 12 basis points compared to the year ago period. Total operating expenses declined to $256.4 million for Q3 FY16, as compared to $256.9 million in Q3 FY15.

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The company’s operating income as a percentage of net sales came at 3.1% for Q3 FY16, a drop of 16 basis points as compared to Q3 FY15. The company reported operating income of $66.0 million for Q3 FY16 as compared to $69.0 million from the year ago period.

Positive Outlook

The company, however, posted an upbeat outlook. The food distributor raised its FY16 earnings estimates range to $2.47 to $2.53 per share, up from the prior outlook of $2.34 to $2.44 per share. Revenue guidance for FY16 was raised in the range of $8.46 billion to $8.5 billion from $8.31 billion to $8.43 billion as reported earlier. The updated guidance is above analysts’ consensus estimates for earnings of $2.38 per share on revenue of $8.41 billion for FY16. The stock rallied after the results were announced, trading more than 10% from $38.94 up to $43.39 in the aftermarket session.

Tough Competitive Landscape

United Natural Foods, which is the largest natural and organic food distributor in the U.S, is facing severe headwinds in its business, particularly impacted by the slowing growth in Whole Foods Market (NASDAQ: WFM), which accounted for 35% of sales during FY2015. Whole Sale Foods Market growth has been impacted from slowing demand and increased pricing pressure from low cost competitors such as The Kroger Co. (NYSE: KR) and Costco Wholesale corporation (NASDAQ: COST).

Technicals

United Natural’s shares are down 39.00% in the past twelve months as compared to S&P 500 which has gained 1.45%. Nonetheless, the stock is up 11.07% in the past one month.

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