Foodservice

United Natural Foods reports 12% net Q3 sales gain, driven by COVID-19

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June 12, 2020

United Natural Foods Inc. reported net sales increased 12% to $6.67 billion compared to $5.96 billion in last year's fiscal third quarter ending May 2, 2020, driven by COVID-19, according to a press release.

Net income per diluted share was $1.60 for the third quarter of fiscal 2020 compared to $1.12 for the third quarter of fiscal 2019. Adjusted earnings per share was $1.40 for the third quarter of fiscal 2020 compared to adjusted EPS of $0.61 in the third quarter of fiscal 2019, reflecting the benefits of higher net sales and the leveraging of fixed costs which were partially offset by a lower gross margin rate and incremental costs related to COVID-19.

Net sales from continuing operations benefited from strong customer demand driven by responses to COVID-19, including the benefits from cross selling, partially offset by the impact from customer bankruptcies that occurred in the second quarter.

Gross margin rate for the third quarter of fiscal 2020 was 12.85% of net sales compared to 13.22% of net sales for the third quarter of fiscal 2019. The decrease in gross margin rate was primarily driven by a mix shift toward lower margin conventional products and lower levels of vendor funding, partially offset by lower levels of inventory shrink.

On May 12, 2020 the company withdrew its previous fiscal 2020 full year guidance based on the strength of its fiscal 2020 year-to-date financial performance. 

The company expects full year adjusted EBITDA to be in the range of $655 million to $670 million. At the midpoint, this would be approximately a 22% growth rate over last year's fourth quarter on a comparable 13-week basis. This adjusted EBITDA translates into an adjusted EPS range of $2.30 to $2.50, which includes the estimated $0.30 per share of additional retail depreciation expense for fiscal 2020.

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