Specialty foods distributor United Natural Foods, Inc. UNFI has planned to open a distribution center in Gilroy, California in August.
The 450,000 square foot Gilroy facility marks a step further in United Natural’s initiative to expand its market reach to the Bay Area and further enhance its existing distribution network in California. The company already has two distribution facilities in Rocklin and Moreno Valley in California.
The new distribution center will not only enhance distribution efficiencies, lower operating costs, and reduce greenhouse gas emissions; it will also bring approximately 500 new jobs to the local community, which is encouraging.
Further, the facility will have features such as energy efficient LED lighting and CO2 refrigeration systems, automation systems and efficient fixtures. Also, the use of onsite ponds and bio retention designs will limit its impact on the environment. The project is also expected to achieve LEED (Leadership in Energy and Environmental Design) Gold certification.
Besides expanding its distribution network, United Natural has been on an acquisition spree to expand its customer base and boost long-term growth. The company acquired Trudeau Foods during first quarter fiscal 2014, which helped it to enhance its position and increase its market share in the specialty products industry.
The acquisition also helped United Natural to expand its products in the markets of Minnesota, North Dakota, Wisconsin and Michigan’s Upper Peninsula. We expect the company’s acquisition of Tony’s Fine Foods to broaden its reach across all of its markets.
However, continued weakness in the Canadian dollar has remained a concern for United Natural. In the recently reported second quarter fiscal 2015, the company reported lower-than-expected earnings and revenues due to currency headwinds. The company also narrowed its guidance for fiscal 2015. (Read: United Natural Lags on Q2 Earnings & Revenues; Shares Fall)
United Natural has a Zacks Rank #3 (Hold). Some better-ranked companies in the broader consumer staple sector include Lorillard, Inc. LO, Philip Morris International, Inc. PM and Reynolds American Inc. RAI. All of them hold a Zacks Rank #2 (Buy).
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