UNFI, WAG

S&P 500: +1.87 (+0.20%)


United Natural Foods (UNFI) +11.80%
United Natural Foods, an organic and natural foods distributor, reported quarterly profit that beat market expectations thanks to lower fuel costs and tighter expense control.

Improvement in gross margin was driven by the specialty division, which was created from the Millbrook acquisition in November 2007. United also managed to decrease operating expenses by implementing expense control programs across all divisions, lower diesel fuel prices, and operational improvements in distribution centers.

United reaffirmed its sales guidance for fiscal 2009 and raised its EPS guidance range to $1.34 to $1.38 from the previous range of $1.28 to $1.36. The company said the revised guidance reflects the impact of improved operating efficiencies and cost controls. They also lowered the fiscal 2009 capex guidance by 25 percent.

Just like grocery shoppers, supermarkets have been trading-down by seeking less-expensive suppliers of its merchandise. United Natural Foods can benefit from this trend since they have the scale to generate operational efficiencies and, thus keep costs low. United’s rivals, the biggest of which is less than half the size of United and barely profitable, do not have this luxury.


Walgreen Company (WAG) +1.54%
Walgreen reported same-store sales in May increased 1 percent and pharmacy sales, which accounted for 65 percent of total sales, increased despite the introduction of lower-priced generic drugs.

Total sales in May were $5.37 billion, an increase of 6.1 percent year-over-year. Comparable front-end (non-pharmacy) sales rose 0.2 percent while comparable pharmacy sales rose 1.5 percent. Walgreen said comparable pharmacy sales were negatively impacted by 4.5 percentage points due to generic introductions in the last 12 months.


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Peter Lazaroff