We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
United Natural (UNFI) Stock Down More Than 15% YTD: Here's Why
Read MoreHide Full Article
United Natural Foods, Inc. (UNFI - Free Report) is in a tight spot thanks to macroeconomic headwinds like inflationary pressures. The leading provider of fresh, branded and owned brand products is facing weakness in the retail business, which is hurting its performance.
These downsides have been hurting United Natural’s performance, as seen in the third quarter of fiscal 2024. Unimpressively, the Zacks Consensus Estimate for Hormel Foods’ fiscal 2024 earnings of 6 cents suggests a decline of 97.3% from the year-ago period’s level.
Shares of the Zacks Rank #4 (Sell) company have declined 16.7% year to date against the industry’s 0.2% growth. The stock underperformed the Zacks Consumer Staple sector’s growth of 6.6%. Let’s delve deeper.
Image Source: Zacks Investment Research
Tough Macro-Economic Environment Hurts
The company has been witnessing a challenging industry backdrop in the past few quarters. Consumers are buying less to manage their budgets and shifting away from traditional grocery stores, possibly seeking more affordable options like discount stores, bulk buys or online shopping. These factors hurt the company’s third-quarter fiscal 2024 results, as the top and the bottom line declined year over year and sales fell short of the Zacks Consensus Estimate.
Quarterly net sales inched down 0.1% to $7,498 million. The downside stemmed from lower unit volumes. Chains, Independent retailers and Retail registered a sales decline of 1.2%, 3.1% and 4.5%, respectively, in the quarter. United Natural’s bottom line slumped 81.5% to 10 cents per share from 54 cents reported in the year-ago period.
Retail Business Challenges
UNFI has been bearing the brunt of weakness in the Retail business for a while. In third-quarter fiscal 2024, sales in the retail segment declined 4.5% year over year. The company’s retail business continues to experience challenges at the top line due to significant price sensitivity among consumers in the retail markets. We note that factors like economic pressures, reduced government assistance, changing consumer behavior and increased competition are affecting consumer spending.
Margin Pressures
United Natural has been battling margin pressure for a while now. Its gross margin contracted 10 basis points to 13.7% in the fiscal third quarter, excluding the non-cash LIFO charge in both periods. The downside was caused by reduced levels of procurement gains stemming from decelerating inflation and a reduced retail gross margin. We believe that persistent margin pressure is likely to keep impacting United Natural’s profitability.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Vital Farms (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2 (Buy). VITL has a trailing four-quarter earnings surprise of 82.5%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings indicate growth of 26.3% and 88.1%, respectively, from the prior-year reported level.
Nomad Foods (NOMD - Free Report) , carrying a Zacks Rank #2, manufactures and distributes frozen foods. NOMD has a trailing four-quarter earnings surprise of 3.1%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and earnings indicates growth of 4.3% and 11.5%, respectively, from the prior-year reported level.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
United Natural (UNFI) Stock Down More Than 15% YTD: Here's Why
United Natural Foods, Inc. (UNFI - Free Report) is in a tight spot thanks to macroeconomic headwinds like inflationary pressures. The leading provider of fresh, branded and owned brand products is facing weakness in the retail business, which is hurting its performance.
These downsides have been hurting United Natural’s performance, as seen in the third quarter of fiscal 2024. Unimpressively, the Zacks Consensus Estimate for Hormel Foods’ fiscal 2024 earnings of 6 cents suggests a decline of 97.3% from the year-ago period’s level.
Shares of the Zacks Rank #4 (Sell) company have declined 16.7% year to date against the industry’s 0.2% growth. The stock underperformed the Zacks Consumer Staple sector’s growth of 6.6%. Let’s delve deeper.
Image Source: Zacks Investment Research
Tough Macro-Economic Environment Hurts
The company has been witnessing a challenging industry backdrop in the past few quarters. Consumers are buying less to manage their budgets and shifting away from traditional grocery stores, possibly seeking more affordable options like discount stores, bulk buys or online shopping. These factors hurt the company’s third-quarter fiscal 2024 results, as the top and the bottom line declined year over year and sales fell short of the Zacks Consensus Estimate.
Quarterly net sales inched down 0.1% to $7,498 million. The downside stemmed from lower unit volumes. Chains, Independent retailers and Retail registered a sales decline of 1.2%, 3.1% and 4.5%, respectively, in the quarter. United Natural’s bottom line slumped 81.5% to 10 cents per share from 54 cents reported in the year-ago period.
Retail Business Challenges
UNFI has been bearing the brunt of weakness in the Retail business for a while. In third-quarter fiscal 2024, sales in the retail segment declined 4.5% year over year. The company’s retail business continues to experience challenges at the top line due to significant price sensitivity among consumers in the retail markets. We note that factors like economic pressures, reduced government assistance, changing consumer behavior and increased competition are affecting consumer spending.
Margin Pressures
United Natural has been battling margin pressure for a while now. Its gross margin contracted 10 basis points to 13.7% in the fiscal third quarter, excluding the non-cash LIFO charge in both periods. The downside was caused by reduced levels of procurement gains stemming from decelerating inflation and a reduced retail gross margin. We believe that persistent margin pressure is likely to keep impacting United Natural’s profitability.
Better-Ranked Staple Bets
The Chef's Warehouse (CHEF - Free Report) , which distributes specialty food products, currently sports a Zacks Rank #1 (Strong Buy). CHEF has a trailing four-quarter earnings surprise of 33.7%, on average. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for The Chef’s Warehouse’s current fiscal year sales and earnings indicates growth of 9.7% and 12.6%, respectively, from the year-ago reported numbers.
Vital Farms (VITL - Free Report) offers a range of produced pasture-raised foods. It currently carries a Zacks Rank #2 (Buy). VITL has a trailing four-quarter earnings surprise of 82.5%, on average.
The Zacks Consensus Estimate for Vital Farms’ current financial-year sales and earnings indicate growth of 26.3% and 88.1%, respectively, from the prior-year reported level.
Nomad Foods (NOMD - Free Report) , carrying a Zacks Rank #2, manufactures and distributes frozen foods. NOMD has a trailing four-quarter earnings surprise of 3.1%, on average.
The Zacks Consensus Estimate for Nomad Foods’ current financial-year sales and earnings indicates growth of 4.3% and 11.5%, respectively, from the prior-year reported level.