Why Grocery Wholesaler United Natural Foods Shares Are Tumbling Today

Grocery wholesaler United Natural Foods Inc UNFI reported fourth-quarter FY23 sales growth of 2% year-on-year to $7.417 billion, missing the analyst consensus of $7.47 billion.

Gross margin for the quarter was 13% versus 14.5% last year. The gross profit fell 8.3% to $966 million.

Operating loss for the quarter was $(75) million compared to an income of $68 million last year.

Adjusted EBITDA of $93 million decreased 56.3% Y/Y. Adjusted EPS of $(0.25) beat the analyst consensus estimate of $(0.28).

The company held $37 million in cash and equivalents as of July 29, 2023. Free cash flow for the quarter totaled $117 million, and the operating cash flow was $222 million.

In Q4, the company repurchased approximately 791,000 shares at an average price of $26.49 for an aggregate cost of approximately $21 million.

"While we grew sales across all of our customer channels, profitability declined primarily due to a decrease in inflation driven procurement gains and elevated shrink. We expect further headwinds as we continue to cycle elevated inflationary benefits during the first half of fiscal 2024," said Sandy Douglas, UNFI Chief Executive Officer.

Outlook: United Natural Foods sees FY24 sales of $30.9 billion-$31.5 billion, against the consensus of $31.03 billion.

UNFI expects FY24 adjusted EPS of $(0.88)-$0.38 versus the consensus of $2.56.

The company sees FY24 adjusted EBITDA of $450 million - $550 million and capital expenditure of about $400 million.

Price Action: UNFI shares are trading lower by 19.56% at $15.22 in premarket on the last check Tuesday.