What happened

Shares of United Natural Foods (NYSE:UNFI) tumbled today after an otherwise strong earnings report wasn't enough to justify the stock's monster gains during the pandemic (shares were up nearly 200% before today's sell-off). The pullback may have also been a sell-the-news event as the supermarket operator had reported similar numbers in a preliminary earnings report back in May.

As of 1:52 p.m. EDT today, the stock was down 19.4%.

The produce section in a supermarket

Image source: Getty Images.

So what

United Natural Foods, which owns a number of supermarket banners it acquired from SuperValu, as well as a natural foods wholesale business, said that revenue in the third quarter increased 12% to $6.67 billion, in line with estimates.   

Its business supplying Whole Foods in the quarter was particularly strong, with sales rising 16.1% to $1.28 billion, while its core supermarkets segment saw revenue increase 15.3% to $4.27 billion. Like other supermarket operators, United Natural Foods benefited from a surge in demand during the lockdown, which led to strong operating leverage, driving profit growth. Adjusted operating income in the quarter increased from $50.9 million to $82.2 million, while adjusted earnings per share jumped from $0.61 to $1.40, even with the company's forecast in its update in May.

CEO Steven Spinner touted the company's momentum going into the fourth quarter, saying, "We expect elevated consumer demand for our wide variety of natural, conventional and fresh perimeter products, along with our ongoing synergy and integration initiatives, to result in a strong finish to the fiscal year."

Now what 

United Natural Foods updated its guidance for the year and now expects revenue of $26.4 billion to $26.6 billion, up from its guidance earlier in the year of $23.5 billion to $24.3 billion. That compared favorably with the analyst consensus of $25.2 billion.

On the bottom line, the company sees adjusted EPS of $2.30 to $2.50, up from a prior range of $0.85 to $1.40, and ahead of estimates at $2.16. That guidance implies a profit of $0.43 to $0.63 in the current quarter, showing the business is starting to normalize from the shutdowns.

Though that guidance was better than estimates, investors may have been expecting more given the momentum from the lockdowns.

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