UNFI stock is down nearly 25% today after United Natural Foods Inc (NYSE:UNFI) reported disappointing fourth-quarter results.
The organic and specialty foods retailer reported quarterly earnings of $0.44 per share, which undershot Zacks Consensus Estimate of $0.69 per share and is a considerable drop off from $0.76 per share reported a year ago. The missed earnings came as a surprise for investors in UNFI stock, particularly given that the company beat earnings per share expectations by nearly 20% in the previous quarter, and had surpassed consensus EPS estimates twice in the last four quarters.
Elsewhere in the earnings report, fourth-quarter net sales increased to $6.41 billion, or 2.8%, excluding the contribution from Supervalu and the additional week in the quarter compared to last year’s fourth quarter. The company also reduced its net debt by $166 million USD in Q4 and by $353 million USD since posting its Q1 results. However, EPS is the figure investors really care about it, and the disappointing return has led to UNFI stock trading down at $8.29.
Edward Kelly of Wells Fargo said that United Natural Foods’ disappointing results will add pressure to a stock that had been steadily improving heading into its earnings call. “Overall, we believe the update was a clear incremental negative, as it raises many questions around the strategic and financial outlook of the company,” Kelly wrote in a note. Wells Fargo maintained its Market Perform rating for UNFI stock but reduced its price target from $10 to $9.
UNFI stock has dropped over 70% in the last 12 months following its $2.9 billion USD acquisition of Supervalu, mostly as a result of difficulties integrating the business coupled with declining sales and rising costs. UNFI has also been struggling with supply issues due to the strong demand for natural and organic foods, which led to out-of-stock issues at both UNFI and Supervalu stores. Despite the rocky start to the acquisition, United Natural Foods CEO Steven Spinner emphasized his belief that “scale will win” over the long-term.
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