UNFI Reports Q3 Sales Growth Amid Cyberattack Disclosure
Third-quarter net sales at United Natural Foods Inc. were up more than 7%, driven by gains in wholesale unit volumes that included new business with existing and new customers.
Net sales for the quarter ended May 3 were $8.1 billion, up 7.5% from the comparable quarter the previous year. The company reported a net loss of $7 million, or $(0.12) per diluted share, an improvement over the net loss of $21 million, or $(0.34) per diluted share, in the third quarter of the prior fiscal year.
"During the third quarter, our customers helped us deliver another solid quarter of sales growth," said Sandy Douglas, UNFI's CEO. "I'm pleased that our focus on becoming a more efficient and effective value-adding partner for our customers and suppliers is leading to steady margin improvement, including a higher year-over-year adjusted EBITDA margin rate and increased free cash flow."
Douglas continued, "In the near term, we are focused on diligently managing through the cyber incident we announced yesterday to rapidly and safely restore our capabilities, while helping our customers with short-term solutions wherever possible."
The quarterly results come a day after the company revealed "unauthorized activity" with its IT systems.
According to an 8-K filing with the Securities and Exchange Commission, the company said it activated its incident response plan and implemented containment measures, which included proactively taking certain systems offline, including those that fulfill and distribute customer orders.
"The incident has caused, and is expected to continue to cause, temporary disruptions to the company's business operations," UNFI said in its June 9 SEC filing. "The company is working actively to assess, mitigate, and remediate the incident with the assistance of third-party cybersecurity professionals and has notified law enforcement. Pursuant to its business continuity plans, the company has implemented workarounds for certain operations in order to continue servicing its customers where possible. The company is continuing to work to restore its systems to safely bring them back online."
UNFI updated its full-year outlook for net (loss) income and EPS to reflect costs and charges associated with exiting a customer contract and optimizing the company's distribution network in the Northeast. The company is now anticipating a full-year net loss of between $55 million and $80 million, or $(0.90) to $(1.30) per diluted share.
Additionally, the company is not updating its outlook for all other metrics despite its underlying business momentum and third-quarter performance.
