Shares of United Natural Foods Inc. UNFI tumbled 24.9% toward a 2 1/2-year low in premarket trading Wednesday, after the grocery wholesaler reported a fiscal third-quarter profit that fell well short of expectations and slashed its full-year outlook as gross margin fell more than forecast. Net income fell to $7 million, or 12 cents a share, from $67 million, or $1.10 a share, in the year-ago period. Excluding nonrecurring items, adjusted earnings per share dropped 50.9% to 54 cents, below the FactSet consensus of 65 cents. Sales grew 3.7% to $7.51 billion, due primarily to inflation and new business, to match the FactSet consensus. Cost of sales rose more than sales, up 4.4% to $6.51 billion, as gross margin contracted to 13.3% from 14.0%. “[O]ur profitability was impacted by a greater-than-expected decline in gross margins reflecting a challenging operating and macroeconomic backdrop, which contributed to lower inflationary benefits primarily related to reduced procurement gains, as well as higher shrink,” said Chief Executive Officer Sandy Douglas. For fiscal 2023, the company cut its guidance range for adjusted EPS to $1.80 to $2.30 from $3.05 to $3.90 but kept its sales outlook unchanged at $30.1 billion to $30.5 billion. The stock has tumbled 32.7% over the past three months through Tuesday, while the S&P 500 SPX has gained 7.5%.
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