By Shares of United Natural Foods (UNFI) took a hit on Tuesday as the company reported a loss in its fourth fiscal quarter and issued a disappointing outlook for the future. The company, known for distributing organic and natural foods to grocers including Amazon.com’s Whole Foods Market, revealed an adjusted loss of 25 cents per share for the fourth quarter. This was a significant drop from the $1.27 earnings recorded in the same quarter last year, but still narrower than the 39-cent loss anticipated by analysts.
CEO Sandy Douglas acknowledged the decline in profitability, attributing it to a decrease in inflation-driven procurement gains and elevated shrinkage. Douglas also warned of further challenges as the company continues to navigate the impact of elevated inflationary benefits during the first half of fiscal 2024.
Looking ahead, United Natural Foods projected an adjusted earnings range of a loss between 88 cents per share and earnings of 38 cents per share for fiscal 2024. This disappointed Wall Street, as analysts had expected earnings of $1.94 per share. The company cited lower levels of anticipated procurement gains, driven by moderating levels of inflation, as well as the restoration of performance-based incentive cash compensation in fiscal 2024.
As a result of these developments, United Natural Foods stock plummeted by 13% to $16.40 in premarket trading on Tuesday. The stock has experienced a significant decline of 51% over the course of this year.
Conclusion
United Natural Foods faces a challenging outlook after reporting losses in its fourth fiscal quarter and disappointing guidance for fiscal 2024. The decline in profitability can be attributed to a decrease in inflation-driven procurement gains and elevated shrinkage. The company expects further headwinds due to elevated inflationary benefits during the first half of fiscal 2024. As a result, United Natural Foods stock has taken a significant hit, with shares depreciating by 51% this year.
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