UNFI Earnings Warning Sparks Stock Slide

DAYVILLE, Conn.--United Natural Foods Inc. (NASDAQ:UNFI) reported preliminary results for its second quarter ended Jan. 31, as well as a guidance for the remainder of its fiscal 2001, including earnings estimates that are well below Wall Street estimates. The company blamed failed Internet businesses and the closure of various Wild Oats locations. Following the announcement, shares of UNFI fell 25 percent to close at $14 1/16 on Feb. 9.

At issue, UNFI expects earnings to be between $.14 to $.15 per share for second quarter, a good margin below $.22 per share expected by analysts. For the third quarter, UNFI predicts about $.20 to $.23 per share, off significantly from $.27 per share estimated by analysts. And fourth quarter earnings projection were for $.22 to $.25 per share, off considerably from $.30 per share anticipated by Wall Street.

Analysts were not as surprised by the numbers as a much as they were caught off guard at how exposed UNFI was to e-commerce companies. Despite the warnings and stock slide, many analysts contended that UNFI is still dominant with a strong future, and suggested that the company was conservative with its figures in lieu of the slowing economy.

"While I strongly believe that today's announcement is not a reflection of our long-term strength in our marketplace, the near-term impact of the situation cannot be ignored," said Michael Funk, chief executive officer of UNFI. He noted that revenues in second quarter look to chart a 5.5-percent increase over the comparable quarter last year, and third and fourth quarter sales growth should be in the 7- to 11-percent range. For more information, visit www.unfi.com.