Shares of United Natural Foods (UNFI 2.23%), a publicly traded wholesale distributor of natural, organic, and specialty foods across North America, are down 24% as of 10:45 AM EST after the release of disappointing first-quarter fiscal 2019 results.
United Natural Foods posted revenue of $2.87 billion during the first quarter, topping analysts' estimates calling for $2.69 billion, but its bottom line left investors disappointed. Adjusted earnings per share checked in at $0.59, well below analysts' estimates calling for $0.74 per share. The disappointing results sent shares plunging lower, worsening a stock performance that has been abysmal over the past twelve months.
Chairman and CEO Steven Spinner took a moment to point out the company's ongoing transformation via acquisition: "We closed on the previously announced purchase of SUPERVALU which will accelerate UNFI's transformation of food distribution throughout North America," he said in a press release. "The integration of the two companies is well under way and we continue to be excited about the long-term creation of value for our shareholders we expect to deliver with this combination."
Not only was the bottom line disappointing, it was yet another quarter marked by declining margins. UNFI's decline in adjusted operating income was driven largely by lower gross margins, as a percentage of net sales, as well as higher labor costs. Management's struggle to improve margins and profitability has plagued the stock over the past year, and unless the company's profitability improves, investors can expect more gloomy quarterly results.