“We are disappointed to end our existing relationship with Albertsons,” said Steve Spinner, president and CEO. “However, we believe that this course of action is in the best long-term interests of United Natural Foods as it will now allow us to redirect our resources to pursue our previously announced plans to expand our focus in fresh categories such as proteins and specialty cheeses across the country, grow our gourmet and ethnic business, and serve as an e-commerce solution for our customers. We plan to utilize the capital freed up from the termination of our Albertsons’ relationship to further pursue our strategic objectives, and we believe this will provide greater value for our shareholders long-term.”
United Natural Foods expects to take a one-time charge to reflect the contract termination and associated termination costs in the first quarter of fiscal 2016. The company will disclose the charge in September when it reports fourth quarter fiscal 2015 results.
The company reported net sales of $2.11 billion for the third quarter, compared to $1.78 billion in the year-ago period. Net income for the quarter increased 14.7 percent to $5.4 million, or 83 cents per diluted share.
The company acquired Sacramento, Calif.-based Tony’s Fine Foods for $193.3 million in July 2014 as part of its renewed focus on fresh foods. Tony’s Fine Foods is a purveyor of specialty foods including meat and seafood, and service deli items such as deli meats, prepared foods and cheese, among other products.
“Our acquisition of Tony’s Fine Foods, which expanded our presence in fresh foods, has exceeded our expectations as consumer interests continue to shift towards the perimeter of the store,” Spinner said in the company’s earnings announcement. “In combination with our Albert’s Organics business, UNFI is well-positioned to capitalize on the consumers’ demands for fresh products. Additionally, UNFI’s investment in refrigerated infrastructure will serve as a catalyst towards increased growth and market share as the platform moves across the country.”