United Natural Foods Inc.’s Performance Factors

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Table of Contents

Internal Performance
Industry Perspective
Environmental Factors
Works Cited

Internal Performance

Company’s strategy, mission, vision, values, and stakeholders

The United Natural Foods Incorporation’s business strategy is specialization in the production of natural and specialty food through value addition and store support across the US. The mission of incorporation is to “exceed the needs and expectations of all our stakeholders” (United Natural Food, Inc. par. 3). The vision of the incorporation is to “be the unparalleled leader in the distribution, development, and marketing of natural and organic, wellness, and specialty food products” (United Natural Food, Inc. par. 4).

The values of the company are unifying, care, involve, do, focus, and connect. These values are met through unifying the stakeholders, servicing the interests of the clients, embracing continuous change, observing integrity, progressive and partnership building. The main stakeholders of the incorporation are “associates, natural and specialty product consumers, suppliers, shareholders, communities, the environment and the planet” (United Natural Food, Inc. par. 5).

Performance indicators

The table presented below shows a summary of financial data for the company.

	2013	2014	Percentage change
Net sales	6,064,355	6,794,447	12.04%
Gross profit	1,025,076	1,127,645	10.01%
Operating income	185,494	210,788	13.64%
Net income	107,854	125,482	16.34%
Cash flow provided by operating activities	44,331	62,419	40.80%
Cash flow used in investing activities	72,321	352,793	387.82%
Cash provided by financing activities	22,343	295,357	1221.92%
Current assets	1,115,218	1,378,290	23.59%
Total assets	1,729,908	2,297,233	32.80%
Total current liabilities	398,267	523,839	31.53%
Total liabilities	630,762	1,053,869	40.15%
Total shareholders’ equity	1,243,364	1,099,146	-11.60%

There was an improvement in the value of net sales, gross profit, operating profit, and net income for the company, as indicated by the percentage growth. It indicates that the profitability of the entity improved. Further, there was an improvement in the cash flow provided by operating activities used in investing activities and financing activities. It shows that cash flow management or the entity improved during the period. A review of current assets and current liabilities shows that the company has a sound liquidity position. The current ratio is more than two during both years. Further, a review of total liabilities and shareholder’s equity shows that the entity has a low leverage level. In 2014, the leverage level rose because of the proportion of total assets that are financed by equity dropped (Collier 34). In general, it can be noted that the overall performance of United Natural Foods, Inc. improved.

Historical stock performance

The graph presented below shows the trend of the monthly stock prices for the period between 1^st January 2009 and 14^th April 2015.

The trend of the monthly stock prices

In the stock chart above, it can be noted that there was an overall growth in the share price. Growth in share prices is directly related to growth in the performance of the company (Yahoo Finance 1).

Industry Perspective

Industry outlook

The food distributor industry in the US has experienced growth in the last two decades. The trend is projected to remain positive as demand for healthy food is currently growing rapidly. Reflectively, the food distribution industry is fragmented, “with Sysco capturing 17% of the market, US Foods with about 9%, PFG with 5%, and Gold Star Foods playing a large part as well” (Gelder 31). Players in the industry have diversified their product as part of the portfolio balance strategy.

Competitive advantage

The table presented below shows a summary of data for the company and for 3 three competitors.

	United Natural Foods, Inc.	Sysco	Hain Celestial Group	Bunzl PLC
Net income	130	871	134	210
Price earnings ratio	28.6	26	49.3	29.6
Debt to equity ratio	0.4	1.4	0.5	0.9

Despite competition from the Sysco, Hain Celestial, and Bunzl PLC, among others, the United Natural Food has several advantages that have ensured its survival. United Natural Food has established a brand image that enables it to attract customers with less effort as opposed to most of its less established rivals. Strong commitment to quality and product innovation enables the company to get the right experience for their customers.

SWOT

Strengths

The United Natural Food has been able to increase its level of sales and profits through increased consumer proximities, clear differentiation, and segmentation of its brands. United Natural Food has increased its own retail business in the last few years, particularly in North America. The other strength of the United Natural Food is an efficient customer relationship management strategy. For instance, United Natural Food does free delivery and have customized services for a customer interested in a specific food product that is not currently available in the store.

Weaknesses

The United Natural Food Incorporation has more presence in the US than in other parts of the globe. Specifically, unlike its main competitors, the incorporation has few branches outside the US. Besides, the focus of the United Natural Food Incorporation is more on large scale food distribution. This is counterproductive in terms of revenue generation since the majority of its customers are small businesses and private individuals who cannot operate in the large scale platform.

Opportunities

The United Natural Food Incorporation has an opportunity to expand its opportunity to cater for expanded food distribution since its asset base is strong enough to sustain this market. This opportunity will help in boosting the United Natural Food Incorporation’s revenues and leadership position in the US food distributor industry.

Threats

The main threat to the survival of the United Natural Food Incorporation is the competition from organic food products that may act as a direct substitute to its brands. Thus, the expansion and market penetration strategies that the United Natural Food Incorporation proposes are likely to face opposition if these substitute products are expanding their market share. United Natural Food Incorporation is faced with fierce competition from its rivals, which requires the adoption of more vigilant strategies.

Environmental Factors

External factors influencing performance

It is very difficult for a new entrant in the US food distributor industry to successfully create a strong brand that can challenge the dominance of the United Natural Food Incorporation and its current competitors. In the organic food segment within the food distribution industry, the threat of possible substitutes is very strong since most of the products are customized, thus, rarely have substitutes. There is a strong power in the fragmented retail segments which are indirect and direct to customers. Fortunately, the above factors have promoted dominance and business sustainability for the United Natural Food Incorporation.

Business regulations

As a legal requirement, companies in the US are expected by the regulatory authorities to be tax compliant. In the US laws of commerce, certificate of compliance for taxes is issued to businesses that remit their returns accurately form which taxes are deducted. Fortunately, the United Natural Food Incorporation operates within these laws and it has created an ideal business environment for its products (World Bank 19).

Social and civic groups critical of firm’s practices

Heritage and culture are valued by the targeted market. The US is a diverse, multi-ethnic, and multicultural society, which makes it a perfect market for the United Natural Food Incorporation’s products. The high demand for healthy food guarantees business sustainability for the United Natural Food Incorporation.

Works Cited

Collier, Paul. Accounting for managers, London: John Wiley & Sons Ltd, 2009. Print.

Gelder, Van. Global brand strategy: unlocking branding potential across countries, cultures and markets, London: Kogan Page Publishers, 2005. Print.

United Natural Food, Inc. Annual financial statements – 2014 form 10K. 2015. Web.

World Bank. Doing business 2008: comparing regulation in 178 economies, New York: World Bank Publications, 2009. Print.

Yahoo Finance. United natural foods, inc. (UNFI). 2015. Web.

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