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United Natural Foods Stumbles with Mixed Q1 Earnings, But Holds Strong for FY24

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United Natural Foods Inc UNFI recorded first-quarter FY24 sales growth of 0.3% Y/Y, reaching $7.552 billion. However, this fell short of the analyst consensus of $7.615 billion.

The company experienced a boost in revenue due to inflation and new business with existing customers, particularly in its Supernatural channel. Yet, this was partly counteracted by a decrease in units sold.

Gross profit took a hit, dropping 6.0% Y/Y to $1.0 billion, with a margin of 13.6% versus 14.6% from a year ago.

Adjusted EBITDA also saw a decline of 43.5% Y/Y to $117 million. Despite this, the adjusted EPS of $(0.04) managed to beat the analyst consensus estimate of $(0.31).

As of Oct. 28, 2023, the company was holding $37 million in cash and equivalents. The free cash flow for the quarter totaled $(328) million, with an operating cash flow of $(254) million.

“Our performance this quarter exceeded our expectations as we drove improved operational execution, which helped deliver savings from our near-term value creation initiatives earlier in the year than previously expected. These savings partially offset the anticipated decline in procurement gains resulting from lower levels of inflation,” said CEO Sandy Douglas.

Outlook: United Natural Foods has reaffirmed its FY24 sales to be in the range of $30.9 billion-$31.5 billion, against the consensus of $31.21 billion, with adjusted EPS of $(0.88)-$0.38 versus the consensus of $(0.2).

The company has also restated guidance for FY24 adjusted EBITDA to be $450 million-$550 million and capital expenditure of about $400 million.

UNFI Price Action: United Natural Foods shares are trading lower by 2.21% at $15.96 on the last check Wednesday.

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Photo: Shutterstock

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