United Natural Foods, Inc. (UNFI) has signed an agreement to divest its non-foods and general merchandise lines of business to L&R Distributors, Inc., a leading national distributor of non-food products and general merchandise.
This strategic transaction will allow UNFI to concentrate on its core business of distribution of natural, organic and specialty foods and products. UNFI entered the non-foods and general merchandise businesses, which includes cosmetics, seasonal products, conventional health & beauty products and hard goods, as part of its acquisition of Millbrook Distribution Services, Inc. in November 2007.
All specialty food products from the Harrison, Arkansas facility will be transferred into the other distribution centers across the United States. In addition, UNFI will be working closely with L&R Distributors and current non-foods and general merchandise customers to ensure a smooth transition of service.
As a result of this divestiture and the closure of the Arkansas facility, the company expects to incur restructuring and impairment charges of approximately $11.0 million to $12.5 million during the fourth quarter of fiscal 2011 and first quarter of fiscal 2012.
These costs will consist of a non-cash impairment charge for the facility’s building and equipment and cash charges primarily associated with severance and related benefit costs, as well as other non-recurring charges to fully transition the specialty food line.
Approximately $8.4 million to $9.6 million of these costs are expected to be incurred in the fourth quarter of fiscal 2011. The balance of the charges will be incurred in the first quarter of fiscal 2012. The divestiture and related closure of the Harrison, Arkansas facility will be accretive to net income, excluding the restructuring and impairment charges noted above, by approximately $1.5 to $2.0 million annually.
Fiscal 2011 Guidance Lowered
Concurrent with the announcement, the company lowered its earnings guidance for fiscal 2011 to a range of $1.55 to $1.59 per diluted share compared to a range of $1.67 to $1.69 a share guided earlier.
The revised guidance reflects the impact of the sale of its non-foods and general merchandise product lines to L&R Distributors and the associated restructuring and impairment charges of approximately $8.4 million to $9.6 million expected to be incurred in the fourth quarter of fiscal 2011. The remaining restructuring charges are expected to be incurred in the first quarter of fiscal 2012.
Be the first to comment