United Natural Foods, a distributor of organic food to Whole Foods Market and other grocery chains, suffered its worst stock decline in almost five months after cutting its annual profit and sales forecast.
The company now expects earnings of $2.79 to $2.89 a share this year, excluding some items, according to a statement Monday. United Natural Foods had previously projected as much as $2.98 for the period, which ends next July. The company’s fiscal first-quarter profit and gross margin also missed analysts’ estimates.
The organic-food market has become more competitive, creating headwinds for the company, chief executive officer Steven Spinner said. The company’s struggles echo those of Whole Foods, an natural-food pioneer that is now having to fend off mainstream grocery chains embracing the organic movement. About a third of United Natural Foods’ revenue comes from Whole Foods, according to data compiled by Bloomberg.
“Rapid adoption of natural and organic products across sales channels has increased the competitive nature of our industry,” Spinner said.
The shares tumbled 16 per cent to close at $36.91 in New York, the biggest one-day drop since 21 July. The stock is now down 52 per cent this year.
Revenue will be $8.43 billion to $8.59 billion this year, United Natural Foods said in the statement. It had forecast as much as $8.67 billion. The Rocklin, California-based company posted earnings of 63 cents in the first quarter, compared with an average analyst estimate of 68 cents.
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