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Major Whole Foods supplier sees unexpected sales bump after Amazon takeover

  • United Natural Foods, a major supplier for Whole Foods, said it saw an unexpected increase in demand last quarter, leading to record sales and higher guidance.
  • United Natural Foods derives roughly a third of its sales from Whole Foods, according to FactSet.
  • This is another sign that Amazon's Whole Foods acquisition has led to a sales increase at the grocery chain.

United Natural Foods, a major Whole Foods supplier, revised its full-year revenue guidance after seeing record sales and an unexpected surge in demand last quarter — another sign that Amazon's Whole Foods acquisition is leading to increased sales at the grocery chain.

During the earnings call on Thursday, United Natural Foods CEO Steve Spinner said the company struggled to keep up with the unexpected increase in demand, causing the company to adjust its operation "in real time," as opposed to being prepared months in advance.

"Our ability to respond and execute at a high-service and low-cost manner was challenged during the quarter," Spinner said.

Although he said the demand came from across all customer channels, Whole Foods likely drove the lion's share of the increase, as United Natural Foods gets about a third of its sales from the grocery chain. Those out-of-stock items meant United Natural Foods incurred a loss of $25 million that it otherwise would not have, he said. (The company showed a total quarterly profit of $30 million.)

For the quarter, United Natural Foods had record quarterly sales of $2.4 billion and raised its full-year revenue guidance to the range of $9.84 billion to $10 billion. United Natural Foods stock is up over 2 percent as of Friday afternoon.

This is the latest indicator suggesting Amazon's impact on Whole Foods' business growth. Last month, Whole Foods disclosed that its sales increased 4.4 percent year over year, the highest jump since the third quarter of 2015.

Amazon has made a number of changes at Whole Foods since buying the grocery chain in June for $13 billion. It cut prices across the board and started selling thousands of Whole Foods products on Amazon.com. It also sells Amazon devices in-store and is expected to roll out special discounts for Amazon Prime members as well.