Stock in United Natural Foods Inc. (UNFI) soared after the distributor shared preliminary financial results illustrating outsized sales and profit growth associated with the coronavirus pandemic.
The Providence, R.I.-based food distributor saw a surge in demand from its retail store customers—including the owned retail banners it has sought to offload for years, Shoppers Food and Cub Foods—during its 13-week fiscal third quarter, which ended May 2. The increased business allowed UNFI to leverage fixed costs, drive higher profits and capitalize on synergies from its acquisition of its conventional rival Supervalu—a move that for UNFI had been slow to pay off until now.
Sales in the period increased 12% to $6.7 billion and net income jumped by 54% to $88 million. Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) was up 32% to $22 million and adjusted earnings per share of $1.40 is up by 130%. The company subsequently withdrew fiscal guidance for the year and is prepping an updated outlook based on the effect of the robust numbers when it reports audited third-quarter financials in early June.
“Customer demand for both our natural and conventional products surged early in our fiscal third quarter and remains elevated, illustrating the value inherent in our strategy to build a distribution network capable of servicing natural, conventional and fresh perimeter products at scale,” Steven Spinner, UNFI’s chairman and CEO, said in a statement. “That demand, along with our ongoing synergy and integration initiatives, contributed to our strong preliminary third-quarter results. We remain fully committed to keeping supermarket shelves across North America stocked and serving our customers and communities when they need us most while prioritizing the safety of our teams who are working with exceptional dedication.”
Stock in UNFI was up by more than 38% in early trading May 13, the morning after its financial update.
The company also updates its initiatives to keep workers safe and on the job through the pandemic, noting it was among the first in the industry to have instituted a temporary hourly pay raise. It has also hired 2,000 new workers in March and April to assist with fulfilling higher demand.
The company has also committed more than $1 million to philanthropic organizations, helping those impacted by the COVID-19 pandemic, including Feeding America, Meals on Wheels and No Kid Hungry, and supporting its communities in Rhode Island and Minnesota. It has donated more than 3 million pounds of food and essential items to food banks across the country.