United Natural Foods slides to 52-week low as Q2 profit falls
Shares of United Natural Foods, Inc. (Nasdaq: UNFI) have fallen to a new 52-week low on news after the close on Thursday that the distributor of natural and organic foods suffered a decline in fiscal second-quarter profit.
The Dayville, Conn.-based company reported that net income for the three months ended Jan. 26 declined 16.5% to $9.1 million, or $0.21 per share, compared with earnings of $10.9 million, or $0.25 per share, a year earlier.
Net sales jumped 24.2% to $830.7 million, from $668.5 million in the second quarter of fiscal 2007.
“In an increasingly tough economy, we are pleased to report strong sales growth in all of our channels,” said president and CEO Michael Funk in a statement. “As we look forward to the rest of fiscal 2008, we remain focused on expanding our presence in specialty foods, and driving synergies from our recent acquisition.”
On Nov. 5, 2007, United Natural announced that it has completed the acquisition of food and general merchandise distributor Millbrook Distribution Services, Inc. The deal allows United National to establish a foothold in the growing market for specialty foods. Financial details were not disclosed.
“They had more difficulty than they anticipated in integrating [Millbrook Distribution],” pushing back the benefits of the acquisition,” said Michael Krestell, an analyst with Toronto-based investment firm M Partners, in a phone interview. Krestell viewed the difficulty as “a short-term pain,” and is maintaining his “buy” rating.
“The core business is very strong; there does not appear to be any slowdown,” he said. “The company is in high-growth mode.”
Looking ahead, United Natural announced that it is reaffirming its projected net sales guidance for fiscal year 2008. The company expects revenues of between $3.27 billion and $3.35 billion. Earnings are projected between $1.12 per share and $1.14 per share.
Wall Street had forecasted revenues of $3.31 billion and earnings of $1.40 per share.
At 3:51 p.m. ET, shares of United Natural Foods (UNFI) had declined $5.92, or 25%, to $17.93. The previous 52-week low of $23.16 was established on Jan. 22, while the 52-week high of $33.33 was touched on Aug. 9, 2007.
