United Natural Foods, Inc. (UNFI) reports that its net sales for its first quarter of fiscal 2020 ending Nov. 2, 2019, increased to $6 billion.
“We entered the new fiscal year operating with an unmatched geographic footprint, the largest variety of products and services in the industry and the critical scale needed to succeed over the long term,” said Steven L. Spinner, chairman and CEO. “We delivered first quarter results in-line with our expectations and are pleased to reaffirm our fiscal 2020 outlook for net sales, Adjusted EBITDA and Adjusted EPS. We remain confident that UNFI is well-positioned today and for the future to deliver an industry-leading and sustainable supply chain platform for all customer channels. As we look to the remainder of fiscal 2020, we are committed to converting our sales momentum into improved earnings and cash flow.”
Gross margin for the first quarter of fiscal 2020 was 12.81 percent of net sales compared to 14.38 of net sales for the first quarter of fiscal 2019, which included a $1.8 million, or 0.06% of net sales, inventory fair value adjustment related to the Supervalu acquisition. The decline in the gross margin rate was primarily driven by the addition of Supervalu at a lower gross profit rate.
UNFI said operating expenses in the first quarter of fiscal 2020 were $775.4 million and included charges of $12.5 million related to customer notes receivable, surplus property expense of $3.6 million, and legal reserve charge of $1.9 million. When excluding these items, operating expenses were $757.5 million, or 12.58 percent of net sales, compared to $363.2 million, or 12.66 percent of net sales for the first quarter of fiscal 2019. The decrease in operating expenses as a percent of net sales was driven by the addition of Supervalu at a lower operating expense rate and the benefit of cost synergies from the Supervalu acquisition, both of which were partially offset by higher depreciation and amortization expense.
Restructuring, acquisition and integration related expenses in the first quarter of fiscal 2020 were $14.3 million, including costs and charges related to the disposal of surplus real estate, distribution network consolidation, and employee-related costs.