United Natural Drops 3.4% As CEO Retires

United Natural Foods fell 3.4% in extended trading on Monday after the company announced the retirement of its CEO Steven L. Spinner. Spinner will leave the food products company once a successor is appointed or his term ends on July 31, 2021. He will remain on the Board as Executive Chairman following his retirement.

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The announcement comes as United Natural Foods’ (UNFI) reported strong 4Q results on Monday. Adjusted EPS increased to $1.06 from $0.35 in the year-ago quarter, surpassing analysts’ expectations of $0.74. The company’s bottom-line results mainly benefited from higher revenues and income tax benefits.

The company’s 4Q revenues of $6.76 billion beat the Street consensus of $6.63 billion. Quarterly sales grew 8% year-over-year on a 13-week comparable basis mainly driven by strong customer demand and benefits from cross-selling. The company’s retail identical store sales jumped 21% year-on-year during the quarter. (See UNFI stock analysis on TipRanks).

In 4Q, United Natural Foods recorded an income tax benefit of 17.5% compared with a tax expense of 56% on pre-tax income in the year-ago quarter. The change in 4Q effective tax rate was mainly due to additional tax benefit from the US Coronavirus Aid, Relief, and Economic Security (CARES) Act.

For fiscal 2021, the company expects revenues and adjusted EPS in the range of $27-$27.8 billion and $3.05-$3.55, respectively.

Last month, Oppenheimer analyst Rupesh Parikh reiterated a Hold rating on the stock following a virtual meeting with the company’s senior management including, CFO John Howard and CMO Chris Testa. In a note to investors, Parikh wrote, “We remain on the sidelines with UNFI driven primarily by elevated leverage levels and limited cash generation. We believe the company is well positioned to benefit N-T from elevated demand related to the current COVID-19 backdrop.”

Overall, the rest of the Street has a cautiously optimistic outlook on UNFI with a Moderate Buy analyst consensus. With shares up nearly 119% year-to-date, the average price target of $25.50 implies further upside potential of approximately 33% to current levels.