UNFI Sees 'Historic' Q2 Results, With Net Sales Up 7.5%

Wholesaler United Natural Foods Inc. on March 9 reported what the company called "historic" financial results for the second quarter of fiscal 2022. Sales were up 7.5% year over year to $7.4 billion—a quarterly record—in the 13-week fiscal quarter that ended Jan. 29. On a two-year stack, net sales were up 14.6%.

“Our second-quarter sales were the highest in UNFI’s history as our customers provided the products consumers sought for their winter holiday occasions,” CEO Sandy Douglas said in a statement. “Despite accelerating inflation and supply-chain concerns, UNFI continues to remain agile to provide the best possible service to our customers.”

For the quarter, net income was up 11.9% year over year to $66 million, while adjusted EBITDA slid 2.4% to $201 million. Adjusted earnings per share dipped, as well, to $1.13—a 9.6% loss.

The company reported that the gross margin rate in the second quarter of fiscal 2022 was 14.5% of net sales, compared with 14.42% of net sales for the second quarter of fiscal 2021.

UNFI said the increase in gross margin rate was driven by improvements in the wholesale segment margin rate, including the impact of inflation and the company’s ValuePath initiative, partially offset by changes in customer mix and a higher LIFO charge. Retail gross margin rate increased modestly compared with last year.

Continuing its debt-reduction efforts in the recently ended quarter, UNFI said it had reduced net outstanding debt by $67 million.

Despite continued supply-chain bottlenecks, the company is forecasting fiscal 2022 net sales growth of 6% and adjusted EBITDA growth of 4%.

“We are optimistic toward the second half of the fiscal year as our Fuel the Future strategy continues to deliver real value and best positions our customers for success in today’s unpredictable environment,” Douglas stated.

The company's second-quarter reporting comes on the heels of two recently announced executive leadership hires. UNFI appointed Louis Martin, current president of the global Walmart customer team for Coca-Cola, to the newly created position of chief strategy and transformation officer, effective March 21. The company also appointed Matt Echols, a former Coca-Cola VP, to the also-newly-created role of chief corporate affairs officer. Echols will oversee the company’s corporate communications and engagement, public policy, government relations, and environmental, social and governance (ESG) teams.

Also this week, UNFI said its Wild Harvest owned brand, which encompasses more than 400 food products across grocery categories, is getting a refreshed look with "a sharper focus on family, ease and taste appeal."

At a time when dollar sales of private-label products have hit an all-time high, Amanda Helming, UNFI’s chief marketing officer, said "Wild Harvest is recognized on shelves nationwide as a trusted choice for consumers looking for a wide range of cleaner and more mindful choices that are easier on their wallets but don’t compromise on taste or quality."

The transition of existing and new products featuring the new brand look will take place across numerous categories over the next 18 months, UNFI said in a statement. The first reveal will take place at the 2022 Natural Products Expo West. Wild Harvest will introduce four new plant-based proteins: burger patties, grinds, meatballs and breakfast patties. The company said the new plant-based proteins are made with pea protein and Non-GMO Project verified ingredients that are free of soy, gluten and palm oil.

"With a short ingredient list, desirable product attributes and a price point that's 5%-10% less than national brands, we're excited to be able to launch new items under a new design to modernize the brand and meet both retailer and consumer needs for a high-quality, more-affordable alternative to national plant-based meats,” Helming said.