United Natural Foods (UNFI) reported a better-than-expected 19% increase in third-quarter profit and lifted its guidance, as sales trends improved and operations ran more efficiently.
The Providence, R.I.-based distributor of natural, organic and specialty foods reported net income of $29 million, or 59 cents a share, compared with a year-earlier $23.4 million, or 48 cents a share.
The results were ahead of the 56 cents analysts on average forecasted in a Thomson Reuters poll.
Revenue for the three months ended April 28 was $1.39 billion, up 14.3% from $1.3 billion a year ago, beating the Street’s view of $1.35 billion.
United Natural Foods’ chief executive, Steven Spinner, attributed the improvement to demand for products and services that gave a lift to sales despite a rise in expenses.
While gross margin slipped to 17.5% from 18.2% a year ago, the company said it was a reflection of a continued shift in customer mix to the convention supermarket channel. Expenses were higher, but the company said new operational efficiencies lowered their percentage on sales.
Despite the mixed results, Spinner said they demonstrate the food distributor's “commitment to growing at a rate that exceeds the industry.”
Reflecting that optimism, the natural foods handler raised its fiscal 2012 guidance. It now sees sales for the year ended July 28 between $5.18 billion to $5.22 billion, up from an earlier range of $5.11 billion to $5.17 billion. Analysts are forecasting sales of $5.16 billion.
Investors applauded the upbeat view, sending United Natural Foods’ shares soaring more than 5% to a new high of $53.99 on the news Tuesday.
The company also narrowed its earnings guidance to a range of $1.84 to $1.88 a share, from an earlier $1.79 to $1.86, which it says reflects the impact of sales trends and operating efficiencies.
Analysts are looking for slightly higher earnings of $1.91.