United Natural Foods Inc (NYSE:UNFI) Q4 2020 Earnings Conference Call - Final Transcript

Sep 29, 2020 • 08:30 am ET

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United Natural Foods Inc (NYSE:UNFI) Q4 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Steven L. Spinner

culture at UNFI. And I want to thank all UNFI associates for their outstanding focus and execution during what have been unprecedented times for our company and for our country. The passion and caring of our people and our company have been clearly demonstrated in recent months.

During the early days of COVID, we proactively took action to manage the spike in demand from customers and consumers, while prioritizing the health and well-being of our associates, as evidenced by our early response with heightened safety, sanitation protocols and flexibility to our attendance and productivity policies. I'm so proud of our culture. Our response to communities in need, social injustice, diversity and inclusion puts UNFI on a leading edge of continuing to do what's right.

We have a strong diversified customer base from which we can grow sales. We have an unmatched distribution center network that we've shown can handle demand, capacity and performance at scale, with one new business from a variety of customers, including those who self distribute to their stores, but recognize the value we can bring to their operations, and we believe we'll win more business going forward.

Towards that goal, we've successfully hired several new leaders to further enable long-term success, including a new Chief Supply Chain Officer, a new CIO, and a new Chief Marketing Officer, all of which positions us well for the future. There is power in our scale, pride in our partnerships and people, and we have never been better positioned for future growth. We've delivered on our promise to transform the world of food throughout North America and built considerable momentum towards building a better future with better food.

Let me now turn the call over to Chris to provide more context on our business performance. Chris?

Executive
Christopher P. Testa

Thanks, Steve, and good morning, everyone. It's my pleasure to join today's call to talk about key trends in our business, as well as the drivers that differentiate UNFI and give us confidence for long-term growth. I'll also provide brief comments on operations and our retail results. As you saw in yesterday's press release, we've changed our sales channel reporting. John will get into the details and rationale behind these changes that now focus on the size of the customer rather than the nature of the products purchased, but I'll comment on the performance of each channel in the quarter.

Fourth quarter sales to chains, our largest channel, accounting for about 40% of sales totaled $2.7 billion, an increase of 6.9% over last year on a comparable 13-week basis. Our fourth quarter changed growth rate includes a 270 basis point headwind from three customer bankruptcies that occurred in the second quarter of fiscal '20. Without that headwind, sales growth of chain customers would have been nearly 10%.

Fourth quarter sales to independent retailers, our next largest channel, totaled $1.8 billion accounting for about 26% of sales in the quarter. Independent retailer sales grew 11.4% compared to last year. Independents have benefited greatly during the