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United Natural Foods, Inc. UNFI reported fourth-quarter fiscal 2020 results, with the top and the bottom line surpassing the Zacks Consensus Estimate. Moreover, earnings and sales increased on a year-over-year basis.
Q4 in Detail
United Natural’s adjusted earnings of $1.06 per share comfortably surpassed the Zacks Consensus Estimate of 71 cents. Further, the bottom line rose significantly from 35 cents in the year-ago quarter. The year-over-year surge can be attributed to greater net sales as well as improved gross margin.
Net sales from continuing operations came in at $6,754.6 million, outpacing the Zacks Consensus Estimate of $6,604.6 million. Sales inched up 0.4% year over year. On a comparable 13-week basis, sales advanced 8% year over year. Sales growth was backed by robust consumer demand and gains from cross selling.
Meanwhile, the company’s gross margin expanded 41 basis points to 14.81%. The upside was driven by greater contribution from robust retail business coupled with reduced promotional activities.
Adjusted operating income came in at $116 million in the quarter, up from $74.7 million reported in the year-ago quarter. Adjusted operating margin increased from 1.11% to 1.72% of net sales, courtesy of higher net sales, increased gross margin as well as fixed operating and administrative expense leverage over higher sales. Also, benefits of synergy and integration efforts were a reason. This was partly affected by COVID-19-related costs. Incidentally, COVID-19-related incremental costs amounted to $30.7 million in the quarter.
Adjusted EBITDA jumped 19.3% to $197.9 million, thanks to improved sales, cost leverage and synergy gains. Results were partly affected by COVID-19-related costs.
United Natural Foods, Inc. Price, Consensus and EPS Surprise
United Natural Foods, Inc. price-consensus-eps-surprise-chart | United Natural Foods, Inc. Quote
From a channel point of view, Supernatural net sales declined 3.9% year over year (up 3.6% on a comparable 13-week basis) to $1,119 million.
Chains channel net sales of $2,713 million fell 0.6% (up 6.9% on a comparable 13-week basis).
Sales in the Independent Retailers channel came in at $1,776 million, improving 3.6% year-over-year (up 11.4% on a comparable 13-week basis).
In the Retail channel, net sales increased 12.9% (up 21.4% on a comparable 13-week basis) to $640 million.
Other sales came in at $507 million, down 9% (down 2.1% on a comparable 13-week basis)
The company ended the quarter with cash and cash equivalents of $47 million, long-term debt of $2,427 million and total shareholders’ equity of $1,142.3 million.
In a separate press release, United Natural informed investors that its Chief Executive – Steven L. Spinner will retire after Jul 31, 2021 when his employment contract expires, or earlier if his successor is appointed.
Fiscal 2021 Guidance
United Natural is impressed with its solid performance in fiscal 2020 and expects the momentum to continue in fiscal 2021. The company expects food-at-home consumption demand to remain elevated outpacing the demand for away from home services for fiscal 2021.
Management forecasts fiscal 2021 net sales in the range of $27-$27.8 billion. This suggests 3.3% growth over fiscal 2020 at midpoint. Further, United Natural projects adjusted EBITDA in a band of $690-$730 million indicating a 5.5% improvement over fiscal 2020 at midpoint. Also, it envisions adjusted earnings per share of $3.05-$3.55 in 2020, which indicates an increase of 21.3% from fiscal 2020 levels at midpoint.
We note that this Zacks Rank #1 (Strong Buy) stock has more than doubled year to date against the industry’s decline of 4.8%.
Other Solid Food Stocks
Flowers Foods FLO, with a Zacks Rank #2 (Buy), has a trailing four-quarter earnings surprise of 8.2%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
TreeHouse Foods THS, with a Zacks Rank #2, has a long-term earnings growth rate of 7.7%.
Kellogg K, with a Zacks Rank #2, has a long-term earnings growth rate of 6%.
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