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United Natural Foods Inc. Reports Operating Results (10-Q)

June 07, 2012 | About:
10qk

10qk

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United Natural Foods Inc. (UNFI) filed Quarterly Report for the period ended 2012-04-28.

Utd Natural Fds has a market cap of $2.36 billion; its shares were traded at around $50.32 with a P/E ratio of 27.4 and P/S ratio of 0.5. Utd Natural Fds had an annual average earning growth of 15.8% over the past 10 years. GuruFocus rated Utd Natural Fds the business predictability rank of 3.5-star.
This is the annual revenues and earnings per share of UNFI over the last 10 years. For detailed 10-year financial data and charts, go to 10-Year Financials of UNFI.


Highlight of Business Operations:

Our gross profit increased approximately 11.9%, or $26.0 million, to $244.5 million for the three months ended April 28, 2012, from $218.5 million for the three months ended April 30, 2011. Our gross profit as a percentage of net sales was 17.6% for the three months ended April 28, 2012 and 18.2% for the three months ended April 30, 2011. The change in gross profit as a percentage of net sales is due to the change in the mix of net sales by channel that began during the second fiscal quarter of 2010.

Our net sales increased approximately 15.5%, or $521.0 million, to $3.89 billion for the nine months ended April 28, 2012, from $3.37 billion for the nine months ended April 30, 2011. This increase was primarily due to the same factors that contributed to our sales growth for the quarter ended April 28, 2012, and growth in our wholesale segment of $519.4 million. Our growth is due to the continued growth of the natural products industry in general, our efforts to increase the number of conventional supermarket customers to whom we distribute products, increased market share as a result of our focus on service and value added services, and the inclusion of a broader selection of products, including specialty food products, in our distribution centers. We also benefited from the inclusion of $25.4 million in incremental net sales for the nine months ended April 28, 2012 compared to the nine months ended April 30, 2011 resulting from expanded distribution to Whole Foods Market following the acquisition of Whole Foods Market’s Southwest and Rocky Mountain distribution business during the first quarter of fiscal 2011. Net sales also benefited from food price inflation of approximately 4.2% that we experienced in the nine months ended April 28, 2012 compared to price levels in the prior year comparable period.

Our gross profit increased approximately 12.4%, or $75.3 million, to $684.8 million for the nine months ended April 28, 2012, from $609.5 million for the nine months ended April 30, 2011. Our gross profit as a percentage of net sales was 17.6% for the nine months ended April 28, 2012, compared to 18.1% for the nine months ended April 30, 2011. The reduction in gross profit as a percentage of net sales is primarily due to the change in the mix of net sales by channel that began during the second fiscal quarter of 2010, a smaller percentage of our conventional supermarket customers being served under a full service model, and higher than average inventory losses related to perishable items and improper storage of products in certain categories.

Our total operating expenses increased approximately 12.4%, or $63.4 million, to $572.6 million for the nine months ended April 28, 2012, from $509.2 million for the nine months ended April 30, 2011. The increase in total operating expenses for the nine months ended April 28, 2012 was primarily due to higher sales volume as well as approximately $5.3 million in severance and other costs related to the previously announced divestiture of our conventional non-food and general merchandise lines of business and approximately $1.7 million in start-up expenses incurred in connection with onboarding our newest national customer. In addition, we recorded approximately $0.3 million for severance payments for a former executive, and our bad debt expense included a combined $1.4 million associated with a bankruptcy filing by one of our customers and a default on a note receivable with one of our customers. The nine months ended April 30, 2011 was also impacted by $4.4 million of labor and other expenses associated with the September 2010 opening of our Lancaster, Texas distribution center and continued incremental start up inefficiencies, $0.6 million for severance payments for former executives and $0.2 million in intangible impairment charges, partially offset by a $2.6 million payment received as part of the settlement of litigation and arbitration resulting from a previous acquisition, which was reflected as a reduction to operating expenses and offset previously recorded legal costs.

Net cash used in operations was $34.9 million for the nine months ended April 28, 2012; an increase of $2.1 million from the $32.8 million used in operations for the nine months ended April 30, 2011. The primary reasons for the increase of net cash used in operations for the nine months ended April 28, 2012 were an increase in inventories of $123.3 million due primarily to our sales growth during the year, an increase in accounts receivable of $81.5 million, partially offset by an increase in accounts payable of $30.5 million and net income of $66.2 million. We expect to continue to generate cash from operations during the fourth quarter of fiscal 2012 primarily from our net income and the reduction of our inventory balances. Net cash used in operations for the nine months ended April 30, 2011 was primarily the result of an increase in inventories of $101.8 million due to our sales growth during the year and commencing operations at our facility in Lancaster, Texas and an increase in accounts receivable of $62.2 million, partially offset by an increase in accounts payable of $25.9 million and net income of $59.5 million.

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