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United Natural Foods Q2 gross margin 12.63%

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Christian Fernsby ▼ | March 12, 2020
United Natural Foods yesterday reported financial results for the second quarter of fiscal 2020 ended February 1, 2020.
United Natural Foods
United Natural Foods   Gross margin for the second quarter of fiscal 2020 was 12.63% of net sales
Net sales from continuing operations benefited from continued growth in their Supernatural channel, which was offset by sales declines in other customer channels.

Topics: United Natural Foods

Gross margin for the second quarter of fiscal 2020 was 12.63% of net sales compared to 12.39% of net sales for the second quarter of fiscal 2019, which included an $8.6 million, or 0.14% of net sales, inventory fair value adjustment related to the Supervalu acquisition.

When excluding this charge, gross margin in the second quarter of fiscal 2019 was 12.53% of net sales.

The increase in gross margin rate was primarily driven by lower inbound freight expense.

Included in gross margin for the second quarter of fiscal 2020 was inventory shrink expense of approximately $4.2 million, or 0.07% of net sales, associated with customer bankruptcies.

Operating expenses in the second quarter of fiscal 2020 were $750.8 million, or 12.23% of net sales, compared to $751.9 million, also 12.23% of net sales, for the second quarter of fiscal 2019.

Operating expenses in the second quarter of fiscal 2020 and fiscal 2019, as a percent of net sales, were approximately equal as cost savings in the second quarter of fiscal 2020 were offset by approximately $28.9 million, or 0.47% of net sales, of bad debt expense associated with customer bankruptcies.

Restructuring, acquisition and integration related expenses in the second quarter of fiscal 2020 were $29.7 million, including costs and charges related to the disposal of existing retail and surplus real estate, distribution network consolidation, and employee-related costs, compared to $47.1 million in the second quarter of fiscal 2019.

Operating (loss) income in the second quarter of fiscal 2020 was $(5.1) million and included expense of $33.1 million associated with customer bankruptcies and $29.7 million of restructuring, acquisition and integration related expenses.

When excluding the restructuring, acquisition and integration expenses, operating income in the second quarter of fiscal 2020 was $24.6 million, or 0.40% of net sales.

Operating loss in the second quarter of fiscal 2019 was $(408.1) million and included a goodwill impairment charge of $370.9 million, restructuring, acquisition, and integration related expenses of $47.1 million, and a fair value inventory adjustment charge associated with the purchase of SUPERVALU of $8.6 million.

When excluding these items, operating income for the second quarter of fiscal 2019 was $18.5 million, or 0.30% of net sales.

The increase in adjusted operating income, as a percent of net sales, was driven by higher gross margins.


 

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