United Natural Foods Earnings Call Nuggets: Increase In Demand and Accounting Details
United Natural Foods, Inc. (NASDAQ:UNFI) recently reported its fourth quarter earnings and discussed the following topics in its earnings conference call.
Increase In Demand
Sean Naughton – Piper Jaffray & Co.: Congrats on a strong top line in the quarter. Just in terms of the acceleration that you continue to see here to start the new fiscal year, is it a continuation of similar trends that you’re seeing in the fourth quarter? Or is there something that is really driving that at one of the particular channels at this point in time?
Steven L. Spinner – President and CEO: No, it’s really a continuation of an increase in demand that we saw towards the fourth quarter of last year and it has continued nicely through the beginning of this year. I wouldn’t say that it’s directed at any one particular channel. The acceleration is across all three of the channels that we report against.
Sean Naughton – Piper Jaffray & Co.: Then secondly, and I know you’ve touched on this a number of times, but just thinking about the out-of-stocks and understanding how that impacts your gross margin, how would you – and I know that in Q1 here that that was called out as little bit of an impact in your last year, how much would you say that that impacted your ability to maintain or expand margins in 2013? I mean what, kind of, gives you some of the confidence that this may normalize post-holiday?
Steven L. Spinner – President and CEO: I mean if you think about what happens when the – we’re always going to have a certain amount of supplier out-of-stocks just in nature of the beast. What happens is when it accelerates beyond historical levels I mean the biggest loss is the lost gross margin on the sales that we lose because we don’t have the inventory. But there is also a fair amount of promotional gross margin that we lose related top those lost sales as well as freight revenue and a whole slew of other things that just don’t take place when we don’t have the inventory. I think we quantified the amount at some point during the last year. We had said that the out-of-stocks were about 100 basis points worse year-over-year in our third and fourth quarter of last year.,,