United Natural Foods, a grocery distributor based in Providence, R.I., experienced a significant decline in shares after reporting a loss in its fiscal fourth quarter. The company’s profit was heavily impacted by decelerating inflation, which led to a decrease in procurement gains.
As a result, the stock dropped by 21% to $14.95 during morning trading. This decline adds to the overall decline of nearly 61% in shares throughout the year.
In the fiscal fourth quarter, United Natural Foods reported a loss of $68 million, or $1.15 per share, which surpassed analysts’ expectations. In comparison, the company had recorded a profit of $39 million, or 63 cents per share, during the same period last year.
Despite this loss, the company’s sales saw a slight increase of 2%, totaling $7.42 billion, which exceeded analysts’ forecasts.
Looking ahead, United Natural Foods expects to continue facing challenges in the coming fiscal year due to diminishing benefits from inflation, which spiked last year. The company attributes its limited opportunities for procurement gains to decelerating inflation. Moreover, elevated levels of shrinkage, caused by damages and theft, also contributed to a decline in quarterly profit.
Analyst Kelly Bania from BMO Capital Markets believes that these latest results and commentary from executives indicate that the company’s earnings have yet to hit rock bottom.
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