This Food Giant Stands Tall

United Natural Foods (NAS: UNFI) posted an estimate-beating double-digit jump in quarterly revenue. However, net income for the quarter fell 2.6% on restructuring charges. Let's analyze its performance.

Yummy numbers...
United Natural Foods performed well in its fourth quarter as sales increased by 17.2% to $1.16 billion. Its increased fuel surcharge revenue also added to its revenue growth for the quarter. UNFI has managed to perform better than its peers such as G. Willi Food (NAS: WILC) and Ingles Markets (NAS: IMKTA) in terms of revenue growth.

Though net income decreased by 2.6% for the same period, it was more because of huge expenses relating to the restructuring of the UNFI's specialty distribution services division. Those restructuring expenses include a noncash impairment charge related to the sale of UNFI's Harrison, Ark., facility and expenses relating to selling off its general merchandise and nonfood lines of business, which includes health and beauty products.

UNFI decided to sell off its other divisions because it wants to concentrate on its core business of sale and distribution of organic and specialty foods to other retailers, such as Whole Foods (NAS: WFM) . The Arkansas facility, which is expected to shut down this quarter, is estimated to save a big chunk of costs to the company annually. That seems like a smart move.

In fact, if we exclude the restructuring costs, earnings per share have increased by 7.5% to $0.43 per share compared to the same quarter last year. A big part of this came from improved gross margins because of higher fuel surcharge revenue and efficiency in its purchases and logistics.

UNFI has already started implementing new warehouse management systems to incorporate efficiencies in its distribution facilities. The company has performed exceptionally well this year with amazing growth in sales compared to last year. Foolish investors should not ignore it.

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At the time thisarticle was published Navneet Bajaj does not own shares of any of the companies mentioned in this article. The Motley Fool owns shares of Whole Foods Market. Motley Fool newsletter services have recommended buying shares of Whole Foods Market. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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