Dive Brief:
- United Natural Foods, Inc.’s net sales dropped by just over 4% during the third quarter of fiscal 2026, to $7.7 billion, a figure that includes the impact of approximately 450 basis points from “optimization actions,” the grocery wholesaler and retailer reported Tuesday.
- For the fourth consecutive quarter, UNFI’s natural segment was the only one of its business units in the green, seeing a net sales increase of over 4% year over year. The company’s conventional and retail segments saw declines of more than 13% and 10%, respectively.
- President and CFO Giorgio Matteo Tarditi told investors during an earnings call that the optimization impact seen this quarter is similar to the one seen in Q2, noting the impact is “in line with our expectations.”
Dive Insight:
UNFI is making “steady progress” on its value creation strategy, CEO Sandy Douglas said during the earnings call.
“We remain confident that our value creation strategy and disciplined execution position us well for long-term sustainable growth and shareholder returns,” Douglas said.
UNFI generated positive net income of $33 million during Q3 despite the sales decline, an improvement over the same period a year ago, when it recorded a $7 million net loss.
The company expects to return to “low single-digit” sales growth during fiscal 2027, according to Tarditi.
Tarditi also noted that UNFI cut its operating expenses by almost 7% during its most recent quarter while boosting distribution center productivity by a similar percentage, which he said contributed to adjusted EBITDA growth of more than 17%.
The company’s “next-generation supply chain capabilities” include expanding its AI-powered supply chain and procurement planning platform to all of its distribution centers and working to complete the supplier-facing portion of this deployment, Douglas said. He added that the platform is “already helping to steadily improve fill rates and inventory management, while also enhancing free cash flow conversion.”
UNFI’s AI-powered fleet management platform has strengthened driver safety processes, optimized routes, and improved delivery execution, Douglas said. On-time deliveries have increased by over 4% year over year, while average miles per delivery have declined by nearly 5%, he said.
The company also added its cloud-based warehouse management system to five additional distribution centers, “further strengthening reliability and consistency across our network,” Douglas said.
The retrenchment in UNFI’s retail segment in Q3 was due in part to the impact of store closures, Tarditi said during the call. He added that same-store sales were down by about 4% due to a “changing pharmacy backdrop” — a dynamic that other grocers have also recently cited as a reason for sales declines.
Tarditi noted that UNFI’s Cub Foods supermarket chain saw improvements in food-driven same-store sales.
Net sales for UNFI’s conventional and retail segments have been on a downward trend for a year, not posting positive sales growth since fiscal year 2025’s third quarter.
UNFI’s share price was off by more than 12% late Tuesday morning as investors reacted to the company’s financial results. Even with that decline, however, the company’s stock market value is up by more than a third so far this year.
