Led by soaring volumes from the Amazon-Whole Foods honeymoon, natural products distributor United Natural Foods Inc. saw stronger-than-expected sales in its fiscal first quarter.
Sales improved by 7.9% overall to $2.5 billion led by a 14.2% sales jump in UNFI’s “supernatural” channel, which includes Whole Foods Markets. The gains were not limited to that channel, officials noted. Helped along by a return of modest price inflation, UNFI saw sales in the supermarket channel rise by 4.6%, while sales to independent natural food retailers grew by 6.6%. Online sales, which UNFI facilitates for customers also increase by 32% in three quarter.
CEO Steven Spinner said he expected the strong sales momentum would continue through the year, prompting the company to increase its fiscal year sales guidance significantly: Whereas previous expectations called for sales growth in the range of 3.5% to 5.8%, UNFI is now calling for 6.2% to 7.8% sales growth.
“We are very encouraged by what we see as increasing and broad-based demand for the capabilities and solutions UNFI provides to our very diverse customer base,” Spinner said. “We expect this business momentum to continue for the balance of the year.”
The surging demand was sudden enough to have put a strain on UNFI’s infrastructure, with some inbound supplies unavailable, and internal costs rising to meet inventory challenges of its customers, Spinner said.
“As we continue throughout our fiscal 2018, we expect our growth to continue driven by demand for better for new products, more competition at retail and enabling differentiated solutions,” Spinner said. “Consumers are shopping many different ways today, they want variety, specific attributes, exclusive brands, private label and brick-and-mortar retail. We play a role in all [of that] and add valuable merchandising, data insights, category management to mutually pursue high-growth opportunities.”
Spinner also mentioned that he believes the retail price environment has become more competitive.
"What that's doing, I think, is closing the price gap between healthy, better-for-you and conventional, which is bringing more traffic into the stores," he said. "We've had long periods of a very limited inflation. And so UNFI is the clear beneficiary in the short-term and we believe in the long-term as evidenced by the revision to our guidance."