United Natural Foods Inc. fell to the lowest level since October as the company cut its full-year forecast after slowing sales growth hit third-quarter earnings.
The Providence, Rhode Island-based company on Monday reported earnings-per-share of 83 cents compared with an average prediction of 85 cents, according to data compiled by Bloomberg. The food distributor reduced its full year outlook for earnings and revenue.
“While comparable sales growth moderated in the quarter, we believe that this is a short term trend,” said Steven Spinner, president and chief executive officer, in a statement Monday. “Demand for organic, gourmet and ethnic products continues to increase, and we have seen sales growth accelerate modestly in the first few weeks of our fourth quarter.”
United Natural’s margins decreased because of dilution from recently acquired Tony’s Fine Food’s net sales, the strong dollar and a shift in the mix of sales, according to the release.
“The breadth of products in the industry has increased rapidly and customers have not adopted UNFI’s offerings at the speed anticipated by management,” Philip Van Deusen, director of research at Tigress Financial Partners LLC wrote in a note Tuesday. Van Deusen reiterated his buy rating on the company, echoing Spinner’s assertion that UNFI’s challenges are transitory.
UNFI dropped 4.6 percent, or $2.92, to $60.74 at the close in New York. The company has declined 21 percent in 2015.