Lots of people seemed thrilled by the announced hook-up between Whole Foods Market (NASDAQ:WFMI) and Wild Oats (NASDAQ:OATS) -- but that fervor didn't spread to supplier United Natural Foods (NASDAQ:UNFI). Meanwhile, United Natural Food's most recent quarter wasn't exactly a barn-burner.

United Natural Foods' net income was 2.5% higher at $10.9 million, but earnings were flat at $0.25 per share. Had it not experienced some one-time events and share-compensation expenses, it would have earned $0.30 per share.

Sales increased 11.2% to $668.5 million, but that figure missed analysts' expectations. United Natural's margins dipped across the board. And capital expenditures exceeded cash from operations, meaning, of course, there's no free cash flow. (Check out the numbers in depth in our related Fool by Numbers feature.)

Although United Natural Foods renewed its relationship with Whole Foods in a seven-year deal last fall, investors have good reason to wonder about the potential impact of Whole Foods' acquisition of Wild Oats. The two retailers make up a large percentage of its sales (as of United Natural's most recent 10-Q, they comprise 35% of sales) and United Natural experienced some sales shrinkage last quarter when Wild Oats closed some stores -- although that effect was mitigated by a few store openings as well.

Of course, there's the possibility that after the merger more could close their doors, although many will be converted to Whole Foods stores. Furthermore, I've seen some analysts note that Whole Foods had better terms with United Natural than Wild Oats did. That's good for the combined Whole Foods entity, but definitely worth noting by United Natural Foods' shareholders.

In fact, United Natural's risk factors in its SEC filings highlight the difficulties it may face in light of greater industry consolidation: "The continuing consolidation of retailers in the natural products industry and the growth of supernatural chains may reduce our profit margins in the future as more customers qualify for greater volume discounts, and we experience pricing pressures from both ends of the supply chain."

True, United Natural does have other interesting avenues of possibility when it comes to distribution of its goods, such as the food-service channel. And of course the growing number of retailers who want to carry organic and natural fare bodes well for this supplier; according to its most recent 10-K, customers include household names like Kroger (NYSE:KR), Costco (NASDAQ:COST), and BJ's Wholesale Club (NYSE:BJ).

However, given the uncertainty that the deal between Whole Foods and Wild Oats presents, it seems to me that now is a good time to take a wait-and-see approach to United Natural Foods.

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Whole Foods Market and Costco are Motley Fool Stock Advisor recommendations. To find out what other companies David and Tom Gardner have recommended to subscribers, click here for a 30-day free trial.

Alyce Lomax owns shares of Whole Foods Market. The Fool has a disclosure policy that's naturally good.