United Natural Foods (UNFI) +20.16%
United Natural Foods soared as earnings exceeded expectations on lower fuel costs, expense control and the continuing integration of Millbrook Specialty business.
For the quarter that ended Jan. 31, United Natural managed to increase sales by 2 percent. This is very impressive given the trade-down trend the more expensive organic/natural foods are facing.
Lower costs stemming from new distribution centers as well as the Millbrook Specialty business helped boost gross margins by 50 basis points. The Specialty business has unique products that serve niche markets and affluent customers, which might explain why it has held up in this weak consumer environment. The Millbrook’s integration appears to be going smoothly and margins in this segment should continue to improve. United Natural’s improved network of distribution centers will also contribute to margin expansion in the future.
The company lowered revenue guidance and widened earnings guidance to reflect lower sales growth and greater uncertainty surrounding the impact of the recent peanut recall. The company also lowered its capital expenditure guidance for fiscal 2009.
H.J. Heinz Company (HNZ) +5.63%
Heinz reported quarterly earnings rose 12 percent on increased pricing, currency hedges and a lower effective tax rate.
Revenues declined 7.5 percent because of the stronger dollar, but sales increased 3.9 percent excluding currency fluctuations as price increases more than offset weaker volume.
The company indicated that the trade-down trend hurt sales results, but the company has been offering different size packages with different price points to better compete against generic products. Also slowing sales were lower orders from retailers that are trying to work down inventory.
Heinz last year enacted price increases as commodity costs rose and they do not plan to roll those increases back, noting the increases weren’t enough to cover the sharp spike in most commodities.
The takeaway from the report today is that Heinz’s business remains fundamentally sound, which is evident in its strong cash flow and balanced portfolio of leading brands.
Quick Hits
- Bernanke Says U.S. Will Acquire Bank Ownership Stakes Only as Losses Occur
- U.S. Bailout, Stimulus Pledges Total $11.6 Trillion (Table)
- Dividends Falling Means S&P 500 Is Still Expensive
- NYSE May Relax $1 Share Price Requirement to Prevent Delistings
Peter Lazaroff, Junior Analyst
No comments:
Post a Comment