UNFI Eyes Canada Expansion

Elliot Zwiebach

PROVIDENCE, R.I. — United Natural Foods Inc. here plans to pursue growth opportunities in Canada while continuing a measured rollout of new technology and engineered labor standards to its distribution centers, the company told analysts Wednesday.

Steven L. Spinner, president and chief executive officer, said UNFI is “very focused” on growing its Canadian business to a range of $450 million to $500 million — approximately 10% of its total sales. UNFI completed the acquisition earlier this month of R.K. Sethi Distribution, a specialty food distributor operating in the Vancouver and Toronto markets, "that will expand our ethnic product offerings,” Spinner noted.

The company expects to “take a breather” from pursuing growth among large supermarket chains in the U.S., he said, “though we have to be opportunistic looking at what becomes available." During the past year UNFI added the Rocky Mountain and Southwest divisions of Whole Foods Market and, shortly before the quarter ended, it added Safeway as a customer.

On the distribution side, the company will add new single-platform voice-pick technology and engineered labor standards to a facility in Ridgefield, Wash., Spinner said, “though we're still narrowing down to an actual implementation time," he added.

For the first quarter, which ended Oct. 29, net income fell 12.9% to $15.2 million — the result of a restructuring of UNFI's specialty division that included the divestiture of its nonfood and general merchandise lines and the shutdown of a distribution center, along with the expense of adding new customers, the company pointed out.

Sales for the quarter rose 15.6% to $1.2 billion, including $25.4 million from the additional Whole Foods business.

Sales in the supernatural channel rose 18.5%, or 11.6% excluding the impact of the Whole Foods acquisition; sales among independents rose 9.8% and sales in the supermarket channel were up 17.5% during the quarter.