UniFirst Q2 Profit Down, Cuts FY14 EPS Outlook Range; Shares Fall - Update

(RTTNews) - Apparel company UniFirst Corp. (UNF) Wednesday reported a decline in second-quarter profit, reflecting higher operating expenses, despite growth in revenues. The company cut the upper end of its earnings per share guidance range for fiscal 2014, but reaffirmed its revenue view. The shares are down about 10 percent in the early morning trade.

For the second quarter ended March 1, 2014, the company posted net income of $25.65 million or $1.27 per share, lower than $26.64 million or $1.33 per share in the previous year.

The provider of workplace uniforms, protective clothing, and facility services products said its revenue and profit comparisons were affected by a customer related specialty merchandise buyout in the year-ago second quarter. Excluding effect of the buyout, earnings per share would have been $1.27 last year.

On average, seven analysts polled by Thomson Reuters expected the company to earn $1.39 per share for the quarter. Analysts' estimates typically exclude special items.

Revenues for the quarter increased 2.9 percent to $343.97 million from $334.31 million in the year-ago quarter. Excluding the effect of the buyout, overall revenues would have increased 3.6 percent from last year. Analysts expected revenue of $347.49 million for the quarter.

Revenues from core Laundry operations rose 3.8 percent to $313.2 million. Excluding the negative impact of the weaker Canadian dollar and specialty merchandise buyout, as well as the positive effect of acquisitions, core Laundry operations' revenues were up 4.3 percent.

Revenues from Specialty Garments' segment declined 9.7 percent to $20.4 million mainly due to fewer power reactor outage projects in the U.S., and Canada, the company said.

Total operating expenses advanced to $303.24 million from $291.42 million a year earlier.

For fiscal 2014, the company currently expects earnings per share to be in the range of $5.60 to $5.75 per share, compared to the earlier outlook of $5.60 to $5.85 per share.

Despite negative impact of weaker Canadian dollar, the firm continues to believe that its fiscal-year revenues will be between $1.372 billion and $1.385 billion. Analysts' expect the company to report profit per share of $5.91, on revenue of $1.38 billion.

The company noted that its fiscal 2014 will be a 52-week year, compared to fiscal 2013, which was a 53-week year.

According to the firm, the negative comparison of one less week of operations will have impact of reducing year-over-year revenues by about 2 percent and fourth-quarter revenues by around 7.1 percent.

UNF is currently trading at $101.85, down $10.86 or 9.64 percent.