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United Natural Foods Inc. (UNFI - Analyst Report) reported adjusted earnings of 40 cents per share in the first quarter fiscal 2012, which were in line with the Zacks Consensus Estimate. However, it inched up by a penny on year-over-year basis. Diluted earnings per share (EPS) came in at 31 cents, down 20.5% year on year.

Diluted EPS in first quarter 2012 compared with the prior-year comparable quarter was affected by the dilutive impact from the Company's equity offering that was completed late in the first quarter of fiscal 2011.

Adjusted earnings exclude the effect of sales related to the Company's prior-year acquisition of certain inventory and distribution assets of Whole Foods Market, Inc., which generated incremental net sales of approximately $25.4 million during the first quarter of fiscal 2012.

Sales and Margins Details

Net sales for the quarter increased 15.6% year over year to $1.22 billion, exceeding the Zacks Consensus Estimate of $1.19 billion.

Gross margin declined 44 basis points from the year-ago period, which was primarily the result of continued shift in customer mix, higher freight and service costs incurred, in part, due to the initial period of distribution to its newest national customer.

Other Financial Details

As of October 29, 2011, United Natural Foods held cash and cash equivalents of $17.1 million, compared with $16.9 million on July 30, 2011. Long-term debt was $0.9 million at the end of the quarter. Capital expenditure at the end of October 29, 2011, was $7.8 million, higher than $7.5 million at the end of October 30, 2010.

United Natural Foods carries and distributes more than 60,000 products to more than 23,000 customer locations throughout the United States and Canada. The company also serves a wide variety of retail formats including conventional supermarket chains, natural product superstores, independent retail operators and the food service channel. However, it fears competition from Nash Finch Co. .

Currently United Natural Foods holds Zacks #3 Ranks that translates into a 'Hold' Rating.

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