UNFI reports $19.3M loss related to acquisition of SUPERVALU

UNITED NATURAL FOODS reported a $19.3 million loss for the fiscal 2019 first quaerter, ended Oct. 27, largely due to costs related to its $2.9 billion acquisition of SUPERVALU.
UNITED NATURAL FOODS reported a $19.3 million loss for the fiscal 2019 first quarter, ended Oct. 27, largely due to costs related to its $2.9 billion acquisition of SUPERVALU.

PROVIDENCE – United Natural Foods Inc. reported a net loss of $19.3 million, or 38 cents per diluted share, for the first quarter of its fiscal 2019, ended Oct. 27. A year prior the company had reported net income of $30.5 million, or 60 cents per diluted share.

The quarterly results were weighed down by restructuring, acquisition and integration costs of $74.2 million related to the company’s purchase of SUPERVALU, which closed during the quarter. The company also said that it expects an additional restructuring cost of $12 million to be recorded during the rest of fiscal 2019.

“We closed on the previously announced purchase of SUPERVALU, which will accelerate UNFI’s transformation of food distribution throughout North America,” said Steven L. Spinner, chairman and CEO. “The integration of the two companies is well underway and we continue to be excited about the long-term creation of value for our shareholders we expect to deliver with this combination.”

Net sales for the quarter totaled $2.9 billion, a 16.7 percent year-over-year increase.

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The company reported sales of $1 billion to Whole Foods, an increase from $853 million the year prior, largely due to same-store sales increases following the acquisition of Whole Foods by Amazon.com Inc.

The company completed its $2.3 billion takeover of SUPERVALU on Oct. 22, paying $1.3 billion in cash to SUPERVALU shareholders and using $1 billion to satisfy the company’s debt obligations.

The company reported sales of $667 million to independent customers, an increase from $639 million the year prior, and $707 in sales to supermarkets, a slight increase from $704 million in the fiscal first quarter the prior year.

The company also said that SUPERVALU sales accounted for $243 million in the fiscal first quarter.

UNFI also noted that its effective tax rate declined from 41.8 percent for the fiscal 2018 first quarter to 16.6 percent for the fiscal 2019 first quarter – driven by savings due to the tax code changes passed by Congress in 2017.

The company has expressed interest and even entered into several agreements to divest itself of some of the retail segment of SUPERVALU, as well as the company’s real estate holdings, in order to focus on wholesale distribution.

The company’s discontinued retail banners, Cub Foods, Hornbacher’s, Shopper’s and Shop ‘n‘ Save, are classified as held for sale.

The company entered into an agreement to sell seven Hornbacher’s locations, as well as one under development to Coborn’s Inc. The deal is expected to close Dec. 25. The companies have also agreed to have UNFI as a primary supplier for the transferred stores.

The company also has entered into an agreement to sell five of eight Shop ‘n‘ Save store locations to GIANT Food Stores LLC. The deal is expected to close in late 2018 or early 2019.

The company also noted that it had divested from Earth Origins in the fiscal fourth quarter, and that SUPERVALU had divested of even more retail stores prior to the acquisition.

At the time of the closing of acquisition, UNFI announced changes to its executive structure.

  • Steve L. Spinner remained chairman and CEO of the company
  • Chris Testa continued to serve as president of UNFI
  • Sean Griffin, previously UNFI’s chief operating officer, became CEO of SUPERVALU, following a May announcement that he was leaving UNFI in October

Chris Bergenheim is the PBN web editor. Email him at Bergenheim@PBN.com