What happened

Shares of United Natural Foods (UNFI 1.54%), the country's largest organic and natural food wholesaler, were pulling back today after the company issued a middling fiscal first-quarter earnings report.

As of 12:12 p.m. ET, the stock was down 11.2%.

So what

United Natural Foods said revenue in the quarter rose 7.6% to $7.53 billion, primarily driven by inflation and new business.

That edged out analysts' estimate for $7.48 billion, but gross margin, a key metric for wholesalers like United, declined 34 basis points to 14.55%, showing the company has been struggling to pass along costs to its customers.

As a result, adjusted earnings per share increased only 2.7% to $1.13, which was just short of the consensus at $1.15 per share.

The company also said it was implementing an industry-leading warehouse automation solution, which should help save on operating costs, and it also reduced its debt by $253 million by monetizing its accounts receivable.

CEO Sandy Douglas said, "Our performance this quarter reflects continued execution of our strategy in a dynamic operating environment as we improved fill rates and operating performance and saw more customers buying more categories from us than ever before."

Now what

United Natural Foods reaffirmed its guidance for the year, calling for revenue of $29.8 billion-$30.4 billion, up 4% at the midpoint, and adjusted earnings per share of $4.85-$5.15, which would also represent 4% growth. The midpoints of those ranges are slightly below analyst estimates at $30.17 billion and $5.04, respectively.

While there wasn't anything particularly problematic in United Natural Foods' earnings report, investors seem disappointed with sluggish bottom-line growth in spite of higher prices.