United Natural Foods’ (NYSE:UNFI) efforts to trim costs and improve operational efficiencies continued to weigh on profitability in fiscal Q3, as the company’s adjusted earnings fell to just $0.10 from $0.85 in the same quarter last year. This was, however, 7 cents better than what the street was expecting and up 3 cents from the previous quarter. The EPS beat coupled with an increase in FY24 adjusted earnings is underpinning the stock price in Wednesday’s premarket trading, with UNFI up by nearly 3% before the open.
Charges related to cost reductions will likely spill into full-year results, as the company lowered its ranges for FY24 net income and EPS but raised its adjusted EPS range for FY24. Adjusted EPS expectations for the full year were raised to a loss of $0.20 to a profit of $0.20 from a loss of $0.56 to a profit of $0.06. This is compared to the consensus estimate for a loss of $0.03 per share.
Net sales in FY24 remains at $30.5B to $31.0B versus the consensus estimate of $30.77B. Net loss was lowered to ($109M)-($85M) from previous estimates for a loss of ($101M)-($65M), while GAAP EPS was also lowered to ($1.85)-($1.45) from initial guidance of ($1.70)-($1.08).
For the most recent quarter, the specialty grocer saw sales roughly unchanged year-over-year to $7.5B as a decline in unit volumes was offset by inflation and new business with existing customers. This missed the consensus estimate by $20M.
Adjusted EBITDA fell by 18.2% to $130M and the company’s adjusted gross profit margin declined slightly to 13.7% from 13.8%. Operating margin increased to 13.2% of net sales versus 12.9% in FQ3 2023.
As of the end of the quarter, total liquidity was approximately $1.26B, consisting of ~$39M in cash plus the unused capacity of ~$1.23B under the asset-based lending facility. Free cash flow dropped to $49M from $65M in the same quarter last year.
