Natural, organic and specialty foods distributor United Natural Foods (NASDAQ:UNFI) reported Tuesday a 24.3 percent rise in third quarter profit as sales rose, prompting a hike in its full year guidance.
For the three months that ended April 28, net income was $29 million, or 59 cents diluted earnings per share, compared to $23.4 million, or 48 cents diluted earnings per share in last year's third quarter. Analysts expected earnings of 56 cents per diluted share for the latest period.
Net sales for the quarter increased 15.3 percent to $1.39 billion, beating analyst revenue forecasts of $1.35 billion. Net sales recorded a year prior were $1.20 billion. Operating income as a percentage of net sales increased 27 basis points to 3.5 percent compared to last year's quarter.
"Continued demand for UNFI's products and services drove our 15.3% net sales growth during the fiscal third quarter," said United Foods' president and CEO, Steven Spinner. "Our results demonstrate UNFI's continued commitment to growing at a rate that exceeds the industry while delivering exemplary customer service to the organic and specialty foods retailer."
Gross margin, however, fell 53 basis points to 17.6 percent, a drop from last year's 18.2 percent, impacted mainly by the continued shift in customer mix to the conventional supermarket channel, the company said.
Total operating expenses grew 9 percent to $195.9 million. "We believe our year to date results have left us in a solid position to achieve our operating result targets for fiscal 2012, which supports our revised fiscal 2012 guidance," said Spinner.
Based on performance to date, the company raised its outlook for the 2012 fiscal year ending July 28. It now expects net sales between $5.18 to $5.22 billion, up from its prior range of $5.11 to $5.17 billion.
The company also boosted its diluted earnings per share expectations to a range of $1.84 to $1.88, compared to its previous guidance of $1.79 to $1.86 per diluted share. Analysts expect earnings of $1.91 per diluted share for the year, on sales of $5.16 billion.
United Natural Foods is a carrier and distributer of more than 60,000 natural, organic and specialty food products, as well as non-food products to more than 23,000 customer locations throughout the United States and Canada.
The company serves several retail formats including conventional supermarket chains, natural product superstores, independent retail operators and the food service channel. Shares of United Natural Foods were up 4.06 percent at $50.22 before the opening bell on Tuesday.