United Natural Foods Profit Misses View, Cuts Outlook; Shares Fall 7%

(RTTNews) - Organic food supplier United Natural Foods Inc. (UNFI), Monday reported an increase in profit for the third quarter, driven largely by double digit growth in revenues. However, both earnings and revenues for the quarter came in short of Wall Street estimates.

The company also lowered its full-year financial guidance, sending its shares down by over 7 percent in the after-hours trade on the Nasdaq.

Providence, Richmond-based United Natural Foods said its third-quarter profit rose to $41.8 million or $0.83 per share from $36.4 million or $0.73 per share last year. On average, 19 analysts polled by Thomson Reuters expected earnings of $0.85 per share for the quarter. Analysts' estimates typically exclude special items.

Profit for the quarter included a gain of $4.2 million associated with a transfer of land at the company's Prescott, Wisconsin facility.

Sales for the third quarter grew 18.7 percent to $2.11 billion from $1.78 billion a year ago. Analysts had a consensus revenue estimate of $2.14 billion for the quarter.

"While comparable sales growth moderated in the quarter, we believe that this is a short term trend," said CEO Steven Spinner, President and Chief Executive Officer.

Gross margin for the third quarter dropped to 15.4 percent from 16.7 percent last year, largely hurt by the dilution from Tony's sales, the unfavorable foreign exchange rate, lower fuel surcharges, and a shift in mix of sales. Operating costs, as a percent of sales, dropped 107 basis points to 12.2 percent from last year.

In July 2014, United Natural Foods acquired Tony's for about $206.2 million.

Looking forward to 2015, the company now expect adjusted earnings of $2.84 to $2.88 per share and sales of $8.15 to $8.19 billion. Analysts currently expect earnings of $2.92 per share on revenues of $8.27 billion for 2015.

Earlier, the company had projected adjusted earnings of $2.90 to $2.99 per share and sales of $8.19 billion to $8.29 billion.

UNFI closed Monday's trading at $63.66, down $0.22 or 0.34%. The stock further dropped to $4.70 or 7.38%, in the after-hours trade.