UNFI posts $383.9M loss on goodwill impairment

PROVIDENCE – United Natural Foods Inc. logged a loss of $383.9 million in its fiscal first quarter of 2020, ended Nov. 2, according to a filing with the Securities and Exchange Commission on Wednesday.

Loss per diluted share was $7.21. The company reported a loss of $19.3 million one year prior, or a loss of 38 cents per diluted share.

Net sales were $6 billion for the fiscal first quarter, an increase of $3.2 billion from one year prior.

  • The company’s supermarket channel reported $3.8 billion in sales for the quarter, a 300.5% increase year over year.
  • UNFI’s “supernatural” channel sales totaled $1.1 billion, an 8.2% increase year over year.
  • Net sales to independents increased 13.6% on the year to $758 million.
  • Sales in the channel category of “other” totaled $381 million, a 56.1% increase from one year prior.

UNFI acquired the wholesaler and retail supermarket company SUPERVALU in October 2018 for approximately $2.9 billion, drastically increasing its revenue. The company is working to divest from much of SUPERVALU’s retail stores. The company announced an agreement to sell 13 stores last week, noting an objective of accelerating its company transformation following the acquisition.

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The deal to purchase the wholesale and retail operation also included the assumption of a large portion of debt. Since the acquisition, UNFI has written down the value of the acquired unit on multiple occasions.

The company said it had goodwill and asset impairment charges of $425.4 million in the quarter, largely reflecting goodwill attributable to its United States wholesale unit. The company previously logged $341.7 million in writedown costs related to SUPERVALU in the quarter ended Jan. 26.

It also said that it incurred restructuring, acquisition and integration costs of $14.3 million in the quarter.

The company’s most recent chief financial officer, Mike Zechmeister, resigned effective Aug. 23.

In November, The International Brotherhood of Teamsters announced a campaign calling on UNFI shareholders to vote no on compensation increases for Steven L. Spinner, UNFI chairman and CEO, saying the acquisition of SUPERVALU was mismanaged and that it has tanked the company’s valuation and stock. The company has a shareholder meeting on Dec. 18.

In January, UNFI sued Goldman Sachs over its role in facilitating the SUPERVALU acquisition, saying the deal’s structure was not in the UNFI’s best interest, potentially exposing it to the competing interests of hedge funds. The lawsuit also claimed that the bank improperly profited off of the deal.

The company reported an $18.9 million profit in its fiscal fourth quarter.

“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 Spinner, noting the figures were in line with expectations. “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.”

Company assets totaled $8 billion at the end of the quarter, while liabilities totaled $6.8 billion. Total current liabilities were $2.3 billion at the end of the quarter. Cash and cash equivalents at that time were $39.8 million, while current assets totaled $3.9 billion.

Chris Bergenheim is the PBN web editor. You may reach him at Bergenheim@PBN.com.