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United Natural (UNFI) Hurt by High Costs, Supply-Chain Woes
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Like many other food companies, United Natural Foods, Inc. (UNFI - Free Report) has been troubled by cost inflation and supply-chain disruptions. The company’s second-quarter fiscal 2023 earnings were hurt by inflationary pressures and supply-chain volatility.
Although management raised its fiscal 2023 sales outlook, it lowered its profitability view for fiscal 2023. In addition, United Natural withdrew its fiscal 2024 target. The Zacks Consensus Estimate for the current fiscal-year earnings per share (EPS) has declined from $3.68 to $3.63 over the past 30 days.
Shares of this Zacks Rank #5 (Strong Sell) company have tumbled 36.4% in the past three months compared with the industry’s decline of 1.3%. Let’s delve deeper into the aspects acting as downsides.
United Natural Foods, Inc. Price, Consensus and EPS Surprise
United Natural witnessed a challenging industry backdrop in the second quarter of fiscal 2023. The company continued to battle increased cost inflation, supply-chain bottlenecks and operational complexities. Adjusted earnings came in at 78 cents per share, down 42.6% from the year-ago quarter’s figure. The metric missed the Zacks Consensus Estimate of $1.38.
United Natural’s gross profit fell 0.6% to $1,069 million. The gross margin (excluding non-cash charges) of 14% contracted from 14.8% in the year-ago quarter. The downside can be attributed to reduced current-period procurement gains stemming from the decelerating inflation rate and reduced inventory gains.
Moreover, operating expenses came in at $1,002 million, up from the $944 million reported in the year-ago quarter. The rise in operating expenses was mainly caused by continued investments in servicing customers.
On its second-quarter earnings call, management stated that it expects to witness similar profitability trends through the rest of the year as it continues to lap periods of considerable procurement gains. This led to lowered profitability guidance.
UNFI expects adjusted fiscal 2023 EBITDA in the range of $715-$785 million, indicating a 10% decline at the midpoint of the guidance. Earlier, management anticipated adjusted EBITDA in the range of $850-$880 million, implying a 4% rise at the midpoint of the guidance.
The company anticipates fiscal 2023 adjusted earnings in the range of $3.05-$3.90 per share, down from the previous guidance range of $4.85-$5.15. At the midpoint, the updated view indicates a 28% slump from the fiscal 2022 reported level.
Wrapping Up
United Natural has been benefiting from its Fuel the Future strategy, which includes six pillars — fulfill power in scale, unlock customer experience, taste the future, UNFI pride, retail optimization and earn results. However, the abovementioned hurdles cannot be ignored in the near term.
Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year EPS suggests an increase of 94.7% from the year-ago reported number.
General Mills, a branded consumer food company, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the corresponding year-ago reported figures.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests an increase of 7% and 15.7%, respectively, from the year-ago reported number.
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United Natural (UNFI) Hurt by High Costs, Supply-Chain Woes
Like many other food companies, United Natural Foods, Inc. (UNFI - Free Report) has been troubled by cost inflation and supply-chain disruptions. The company’s second-quarter fiscal 2023 earnings were hurt by inflationary pressures and supply-chain volatility.
Although management raised its fiscal 2023 sales outlook, it lowered its profitability view for fiscal 2023. In addition, United Natural withdrew its fiscal 2024 target. The Zacks Consensus Estimate for the current fiscal-year earnings per share (EPS) has declined from $3.68 to $3.63 over the past 30 days.
Shares of this Zacks Rank #5 (Strong Sell) company have tumbled 36.4% in the past three months compared with the industry’s decline of 1.3%. Let’s delve deeper into the aspects acting as downsides.
United Natural Foods, Inc. Price, Consensus and EPS Surprise
United Natural Foods, Inc. price-consensus-eps-surprise-chart | United Natural Foods, Inc. Quote
Cost & Margin Woes
United Natural witnessed a challenging industry backdrop in the second quarter of fiscal 2023. The company continued to battle increased cost inflation, supply-chain bottlenecks and operational complexities. Adjusted earnings came in at 78 cents per share, down 42.6% from the year-ago quarter’s figure. The metric missed the Zacks Consensus Estimate of $1.38.
United Natural’s gross profit fell 0.6% to $1,069 million. The gross margin (excluding non-cash charges) of 14% contracted from 14.8% in the year-ago quarter. The downside can be attributed to reduced current-period procurement gains stemming from the decelerating inflation rate and reduced inventory gains.
Moreover, operating expenses came in at $1,002 million, up from the $944 million reported in the year-ago quarter. The rise in operating expenses was mainly caused by continued investments in servicing customers.
On its second-quarter earnings call, management stated that it expects to witness similar profitability trends through the rest of the year as it continues to lap periods of considerable procurement gains. This led to lowered profitability guidance.
UNFI expects adjusted fiscal 2023 EBITDA in the range of $715-$785 million, indicating a 10% decline at the midpoint of the guidance. Earlier, management anticipated adjusted EBITDA in the range of $850-$880 million, implying a 4% rise at the midpoint of the guidance.
The company anticipates fiscal 2023 adjusted earnings in the range of $3.05-$3.90 per share, down from the previous guidance range of $4.85-$5.15. At the midpoint, the updated view indicates a 28% slump from the fiscal 2022 reported level.
Wrapping Up
United Natural has been benefiting from its Fuel the Future strategy, which includes six pillars — fulfill power in scale, unlock customer experience, taste the future, UNFI pride, retail optimization and earn results. However, the abovementioned hurdles cannot be ignored in the near term.
Solid Consumer Staple Picks
Some better-ranked consumer staple stocks are Lamb Weston (LW - Free Report) , General Mills (GIS - Free Report) and Conagra Brands (CAG - Free Report) .
Lamb Weston, which operates as a frozen potato product company, currently sports a Zacks Rank #1 (Strong Buy). LW has a trailing four-quarter earnings surprise of 47.6%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year EPS suggests an increase of 94.7% from the year-ago reported number.
General Mills, a branded consumer food company, currently carries a Zacks Rank #2 (Buy). GIS has a trailing four-quarter earnings surprise of 8.1%, on average.
The Zacks Consensus Estimate for General Mills’ current fiscal-year sales and earnings suggests growth of 6.3% and 7.4%, respectively, from the corresponding year-ago reported figures.
Conagra Brands, operating as a consumer-packaged goods food company, currently carries a Zacks Rank #2. CAG has a trailing four-quarter earnings surprise of 13.2%, on average.
The Zacks Consensus Estimate for Conagra Brands’ current fiscal-year sales and earnings suggests an increase of 7% and 15.7%, respectively, from the year-ago reported number.