Wholesale grocery distributor Unified Grocers experienced a difficult quarter financially, reflected in the Commerce, California-based company results for its fiscal 2017 second quarter ended April 1. It blames most of its losses on “substantial transaction costs and other expenses associated with preparations for the execution of a definitive merger agreement with Supervalu,” which was announced in mid-April.
Several other factors also contributed to the $2.8 million decrease in operating income in the quarter. These included a change in the company’s dairy program in July 2016, whereby prices were reduced and the dairy patronage dividend was discontinued, and an equity adjustment related to the company’s investment in Western Family. Logistics improvements and reduced administrative expenses partially offset this loss of income, according to Unified.
The company saw an overall net sales decrease of $37.7 million, or 4.1 percent, to $877.4 million for the quarter compared to $915.1 million for fiscal 2016’s second quarter. The decline in sales, according to Unified, was the result of a number of factors, including the loss of some unprofitable non-member business; some loss in business following the sale of the Los Angeles bakery manufacturing facility; and lower meat sales prices due to declines in the related commodity cost that were passed along to customers.
“The business is on a steady track, despite the distractions and expenses associated with the Supervalu transaction and other one-off expenses that negatively impacted operating income in the second quarter,” said Unified Grocers President and CEO Bob Ling. “Total sales to our existing customer base have remained stable and, even in a deflationary cycle, our margins are sound after removing the impact of lowering prices in the dairy. We have made tremendous improvements in our core business, which remains sound despite the headwinds our broader industry is facing.”