Holy granola! United Natural Foods
Actually, though, the exclamation "holy granola" is probably a bit too strong, as the five-year gig with Wild Oats isn't wholly unexpected. United Natural Foods disclosed in its third-quarter press release that it expected to get its erstwhile customer back on board in the beginning of this year.
As it stands now, Whole Foods Market
Today's announcement included United Natural upping its revenue forecast to the $1.60 billion to $1.62 billion range, compared to its previous expectation of $1.55 billion to $1.57 billion. United Natural said it expects earnings of $1.46 to $1.52 per share (excluding special items), up from $1.42 to $1.46 a share.
Bear in mind, Wild Oats has struggled a bit since it switched to Tree of Life as its primary distributor. In October, the natural foods grocer outlined major supply chain problems, ranging from products that were out of stock to glitches with stock-keeping unit designations. The assumption is that the reconciliation with United Natural will tame some of the crazy times at Wild Oats.
In addition, United Natural's announcement outlined a special charge related to the deal, which it expects to be $1 million over the second and third quarters of fiscal 2004. The company also said it has assigned and transferred its obligations to a third party, which will result in its revolving credit facility bearing interest at a variable rate based on LIBOR.
Given that the three-month transition period with Wild Oats goes smoothly, there are lots of reasons to applaud a deal where a former major customer returns to the fold. As long as the supply problems Wild Oats had over the last year haven't alienated its own customers, United Natural's looking to have lined itself up a sweet deal.
Is this great news, or do you just say pass on United Natural and the Wild Oats deal? Is organic just a passing fad? Discuss the industry on the Food discussion board.
Alyce Lomax welcomes your feedback at firstname.lastname@example.org.