Online Cub Foods Sales Lift UNFI in Q1
Strong customer demand from existing and new retailers, as well as a 200% increase in e-commerce sales at Cub Foods, propelled United Natural Foods Inc. (UNFI) in the first quarter.
The company reported net sales increasing 6% to $6.67 billion for the period ended Oct. 31. But higher expenses, including the opening of three new distribution centers, led to a net loss of $1 million for the quarter, or 2 cents per diluted share. Adjusted EBITDA increased 30.6% to $159 million. Adjusted earnings per share (EPS) increased by 47 cents to 51 cents.
“I am pleased with the start to fiscal 2021 as UNFI leveraged strong sales growth into year-over-year expanded adjusted EBITDA margins for the third consecutive quarter,” said Steven L. Spinner, chairman and CEO. “We’ve done a great job protecting the safety of our associates and helping our customers succeed in an evolving operating environment while building for the future through new distribution centers, customer solutions, and innovation across our business. Our newest distribution center will be a campus in Allentown, PA to service Key Food beginning next fall and facilitate further growth in the greater New York metropolitan market.”
In an earnings call, UNFI President and CMO Christopher Testa said that Cub Foods is averaging 30,000 digital orders per week and that e-commerce is the fastest growing segment of UNFI's business.
UNFI acquired Cub Foods (as part of Supervalu) in 2018. UNFI had been planning to sell off the 79-store Cub Foods chain, but those plans have been delayed by the pandemic.
Also this week, UNFI said it is reducing its impact on climate change by setting science-based emissions reduction targets covering its own operations and value chain.
The company expects its targets will align with the goals of the Paris Agreement to limit global temperature rise to well below 2°C above pre-industrial levels, and to pursue efforts to limit warming to 1.5°C for the best chance of avoiding the worst impacts of climate change.
“Our commitment to setting science-based emissions reduction targets demonstrates our continued focus on reducing our environmental impact, conserving natural resources, and promoting sustainability in our operations and across our value chain,” said UNFI Chairman and CEO Steven L. Spinner. “We take seriously the need for business accountability in solving this global challenge to ensure a healthy planet for future generations, while providing financial returns to our shareholders.”
The wholesaler’s environmental targets are expected to be submitted for approval to the Science-Based Targets initiative (SBTi) within the next year. SBTi aims to drive ambitious climate change action in the private sector.
UNFI joins other major names in the food industry that have recently implemented plans for a more sustainable future. For example, Coral Gables, Florida-based Fresh Del Monte Produce also announced it is joining the SBTi. The global marketer of fruits and vegetables committed to reduce its carbon footprint and will work with SBTi to develop its target for reducing greenhouse-gas emissions by 2030. Meanwhile, Vevey, Switzerland-based Nestlé accelerated its plan to achieve net-zero greenhouse-gas emissions. Several of its leading U.S. brands, like Sweet Earth Foods and Garden of Life, recently revealed commitments to achieve carbon neutrality in the next few years.
UNFI is also looking forward to activating its 2030 ESG (environmental, social and governance) agenda in 2021. Earlier this year, the wholesaler joined the Hartland, Vermont-based Climate Collaborative, working with like-minded businesses in the natural products industry taking action to reverse climate change. UNFI is piloting its first all-electric solar-powered refrigerated trailer in California as a way to reduce the climate impact of its fleet.
“Climate science clearly states that we cannot continue on a path of business as usual. Collective action is essential, and we look forward to engaging our value chain in these important efforts,” said Alisha Real, UNFI's director of sustainability and social impact.
Providence, Rhode Island-based UNFI delivers a wide variety of products to customer locations throughout North America, including natural product superstores, independent retailers, conventional supermarket chains, e-commerce retailers and foodservice customers. The largest publicly traded grocery distributor in America, the company is No. 61 on The PG 100, Progressive Grocer's list of the top food and consumables retailers in North America.
