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Specialty foods distributor, United Natural Foods, Inc. (UNFI - Analyst Report) delivered third quarter fiscal 2013 earnings of 64 cents per share, which beat the Zacks Consensus Estimate of 63 cents by 1.6%. Earnings also increased 8.5% year on year from 59 cents, driven by top-line growth.

Revenue and Margin Details

Net sales for the quarter increased 12.8% year over year to $1.57 billion compared with $1.39 billion in the prior-year quarter. Net sales marginally beat the Zacks Consensus Estimate of $1.56 billion. The results were driven by continuous increase in demand for the company’s organic and natural food products.

Gross margin plummeted 83 basis points to 16.8% from the year-ago period, primarily due to increase in freight expenses. In addition, the decline was due to the shift in customer mix to lower-margin conventional supermarkets, which has been negatively impacting the company’s gross margins over the past several quarters.

Operating margin declined 6 basis points to 3.4% in the reported quarter due to higher operating expenses.

Guidance

Based on strong third quarter performance and a positive outlook for the rest of the fiscal, United Natural has raised its net sales guidance to a range of $6.03 billion – $6.06 billion, from the previous range of $5.88 billion - $5.98 billion announced in Sep 2011. The new sales guidance represents an increase of 15.2% to 15.7% over fiscal 2012.

United Natural has narrowed its adjusted earnings guidance in the range of $2.15 to $2.17 per share, compared with the previous guidance of approximately $2.15 to $2.21 per share. The new earnings guidance represents an increase of approximately 10.8% to 11.9% over fiscal 2012 adjusted earnings of $1.94 per share.

United Natural currently holds a Zacks Rank #3 (Hold). Other stocks in the food industry worth considering are Green Mountain Coffee Roasters, Inc (GMCR - Analyst Report), Natural Grocers by Vitamin Cotta (NGVC - Snapshot Report) and Core Mark Holding Co. Inc (CORE - Snapshot Report). While Green Mountain holds a Zacks Rank #1 (Strong Buy), Natural Grocers and Core Mark hold a Zacks Rank #2 (Buy).

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