United Natural Foods (UNFI) experienced a significant drop in its stock price after reporting lower-than-expected revenue in its fourth-quarter financial report. The company’s profitability was also affected due to a decrease in inflation-driven procurement gains and elevated shrink. CEO Sandy Douglas warned of further challenges in the first half of fiscal year 2024 as they cycle through elevated inflationary benefits. UNFI’s outlook for 2024 includes projected sales of $30.9 billion to $31.5 billion, falling short of the consensus estimate of $31.0 billion, and an EPS forecast of -$0.88 to -$0.38, compared to a consensus estimate of $2.28.
In response to the disappointing results, United Natural Foods announced the addition of new members to its board and the initiation of a financial review to enhance the company’s performance and generate shareholder value. These actions aim to accelerate UNFI’s transformation and secure both short-term and long-term success. As a result of the negative news, the company’s stock tumbled by 19.98% in premarket trading, reaching a new 52-week low of $15.14.
Despite growing sales across various customer channels, United Natural Foods faced challenges in maintaining profitability, leading to a decline in its stock value. The company anticipates additional headwinds due to the expiration of inflationary benefits in the upcoming months. UNFI’s outlook for 2024, including sales and earnings per share, fell below market expectations. To address these issues, the company announced plans to strengthen its board and undergo a financial review aimed at improving performance and creating value for shareholders. The significant drop in stock price reflects investors’ concerns regarding the company’s current state and future prospects.