United Natural Foods, Inc. (Nasdaq: UNFI) has entered into a new seven year contract with Whole Foods Market Distribution, Inc., a wholly owned subsidiary of Whole Foods Market, Inc. (Nasdaq: WFMI).
United Natural Foods will continue to serve as the primary wholesale natural grocery distributor to Whole Foods Market in its United States regions where United Natural Foods currently serves as the primary distributor.
This new agreement replaces an existing three-year primary distribution agreement that was scheduled to expire December 31, 2007. Walter Robb, Co-President and Co-Chief Operating Officer of Whole Foods Market, commented, “This seven-year agreement will allow us to concentrate our capital investment and resources on aggressively expanding our store base. Having United Natural Foods as a distribution partner is an important element of our growth strategy and we look forward to building and enhancing the strategic partnership between the two companies.”
Michael Funk, United Natural Foods’ President and Chief Executive Officer, commented, “Having secured Whole Foods Market’s long-term commitment in utilizing United Natural Foods as its primary natural grocery distributor, we will be able to continue to invest in our infrastructure to provide scalability as well as the necessary support to meet their growth needs as well as the growth of all our customers. Over the next 18 to 24 months, we will continue to focus on enhancing our distribution network in order to improve customer service as well as reduce transportation costs.”
United Natural Foods reported net sales for fiscal 2006, ended July 29, 2006, of $2.43 billion. Whole Foods accounted for approximately 26% of United Natural Foods sales in fiscal 2006.
United Natural Foods Reiterates Fiscal 2007 Guidance
In conjunction with the announcement of the new long-term agreement with Whole Foods Market, the Company reiterated its fiscal 2007 guidance, which was originally provided on August 30, 2006.
For fiscal 2007, revenues are expected to increase approximately 11% to 15% from fiscal 2006 to a range of $2.7 billion to $2.8 billion. Fiscal 2007 earnings per diluted share are expected to be in the range of $1.25 to $1.30 per share, an increase of 15% to 19% over fiscal 2006.
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