New United CEO Eyes Efficiencies

MARK HAMSTRA

DAYVILLE, Conn. — In a surprise move, United Natural Foods here last week said it has named distribution veteran Steven L. Spinner as the company's new president and chief executive officer, succeeding Michael Funk, who becomes chairman of the board.

Spinner most recently was CEO of Performance Food Group, a foodservice distributor based in Richmond, Va., with operations concentrated along the East Coast. His appointment to United Natural, a distributor of natural and organic products, could accelerate the wholesaler's effort to modernize and synchronize its back-end infrastructure, analysts said.

Funk, a co-founder of United Natural, had served a previous stint as CEO and had returned to that role at United in October 2005, following the resignation of Steven Townsend. More recently, Funk had also assumed the duties of Richard Antonelli, who recently retired as executive vice president, chief operating officer and president of distribution.

United also said that its current chairman, Thomas B. Simone, will become vice chairman, as Funk transitions into the chairmanship.

In a conference call with analysts last week, Funk said he had not been planning to leave his role as CEO, but analysts had suggested that he talk to Spinner, whose Performance Food Group was being bought out by private equity. That deal closed in May.

“I originally had no plans to step down as CEO,” Funk said. “I felt the opportunity to take advantage of Steve Spinner's availability to assume the role was a once-in-a-lifetime opportunity for the company.”

Performance Food Group, with annual sales of about $6.3 billion, is more than twice the size of United Natural, which had revenues of about $2.7 billion last year. United Natural is a supplier to traditional supermarkets and independent natural-food stores as well as to Whole Foods Market. Last year it acquired Millbrook Distribution, a specialty-food wholesaler.

In addition to the integration of Millbrook, which United had struggled with at first, the company is also working to upgrade its technology systems.

“Obviously, the systems integration work and upgrading that we have to do is a significant project and is very much a priority,” Funk said. “I think [with] Steve's past experience with that at PFG, it's great timing for us to have that additional level of experience to help guide us through that. So it's a focus for us and a priority, and I am expecting Steve will be able to bring a lot of value to the process.”

Andrew Wolf, an analyst with BB&T Capital Markets, Richmond, Va., said he thinks Spinner will accelerate the rollout of more modern technologies like voice-pick throughout United Natural's warehouse network, as well as work to unite the company's disparate operating systems.

“I think the bigger potential for creating efficiencies is in warehouse systems,” Wolf said, noting that was something Spinner had done at Performance Food Group. “There are automated warehouse systems that also allow better, more efficient put-away and more efficient picking with less pick mistakes and higher fulfillment rates. And in terms of putting all the business on one platform, that's something he's done at Performance, too.”

Wolf said he considers Spinner to be “one of the top operational executives in food distribution” and that he views the move by United Natural “very positively.”