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United Natural Foods' (UNFI) stock tumbled early Wednesday as the grocery wholesaler slashed its full-year earnings outlook following a mixed fiscal third quarter, impacted by substantial industry headwinds and gross margin declines.
Per-share adjusted earnings are now set to come in between $1.80 and $2.30 for fiscal 2023, down from previous projections of $3.05 to $3.90, the company said. The consensus among analysts on Capital IQ is for EPS of $3.31. Shares of the company slumped 26% in premarket trading.
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"While work is underway on our longer-term improvement efforts, we're also focused on taking immediate cost mitigation actions to improve the profitability of our business in the near term, with these near-term profitability enhancements projected to deliver over $100 million of annualized benefits," Chief Executive Sandy Douglas said in a statement.
United Natural Foods continues to expect sales to be in a range of $30.1 billion to $30.5 billion, compared with the Street's estimate of $30.37 billion for the ongoing year. It also reiterated its capital expenditures guidance of roughly $350 million.
For the quarter ended April 29, adjusted earnings dropped to $0.54 a share from $1.10 the year before, missing the Capital IQ-polled consensus of $0.65. Sales rose 3.7% to $7.51 billion, in line with the Street's view, mainly driven by inflation and new business.
"Our profitability was impacted by a greater-than-expected decline in gross margins reflecting a challenging operating and macroeconomic backdrop, which contributed to lower inflationary benefits primarily related to reduced procurement gains, as well as higher shrink," according to Douglas.
Revenue in the supernatural segment jumped 12% to $1.65 billion, while chains and independent retailers logged gains of 0.6% and 2.3%, respectively. Retail sales edged down 0.7% to $598 million.
Operating expenses narrowed to $967 million from $969 million year-over-year, according to the company.