After a challenging quarter and fiscal year, UNFI is continuing its multi-year journey transformation into a tech-enabled food retail services company.
United Natural Foods, Inc. (UNFI) is wrapping up its tough fiscal year, looking ahead to the new one. The company released its fourth quarter and full fiscal year results for 2023, which revealed pockets of loss during a period of transformation.
First, the losses: Bottom-line data for the quarter ending July 29 showed a net income loss of $68 million, an $87 million drop in gross profits and a 56.3% fall in adjusted EBITDA compared to the fourth quarter in 2022. For the year, net income hit $24 million, compared to $248 million in profits the previous fiscal year.
The sometimes-dramatic shifts in financials were attributed to overall market volatility and UNFI’s investments in its ongoing transformation agenda centered in improving operating and supply chain efficiencies. “Our fourth quarter concluded a challenging year in which we continued to emphasize serving customers and suppliers, and we also worked diligently to improve operating effectiveness, efficiency and our technological capabilities,” summed up CEO Sandy Douglas. “While we grew sales across all of our customer channels, profitability declined primarily due to a decrease in inflation driven procurement gains and elevated shrink.”
According to Douglas, although the company is moving ahead on its initiatives, some of the difficult circumstances remain, at least for the short term. “We expect further headwinds as we continue to cycle elevated inflationary benefits during the first half of fiscal 2024,” Douglas added.
Accordingly, UNFI anticipates sales to land between $30.9 billion and $31.5 billion in FY2024, below the market estimate of $31.03 billion. The company projects an adjusted EBITDA range of $450 million to $550 million and capital expenditures of approximately $400 million.
Moving out of the negative territory, sales growth for the fourth quarter did rise 2% to reach $7.41 billion, a gain credited to inflation and business from new customers and new/expanded categories. In its quarterly and fiscal year report, UNFI also pointed out that its fiscal year sales were in line with its latest outlook and EBITDA and earnings came in at the high end of its most recent projections. Additionally, the year-end net debt was $1.4 billion lower than the end of 2018.
The recap highlighted UNFI’s strides towards its efficiency goals, like the recent consolidation of its operation regions from four to three areas, construction of a new automated distribution center in Sarasota, Fla., and actions to expand retail insights, mobile and myUNFI portals.
As Douglas put it, “As we look to the new fiscal year, we’re focused on addressing near-term profitability while creating a structurally more efficient technology-enabled food retail services company that can better serve our customers and capitalize on the significant growth opportunities we see ahead.”
The wholesaler also announced the addition of three new seasoned board members who will help the company progress on its transformation plans. Joining the board are independent directors Lynn Blake, a 30-year investment industry pro who most recently served as EVP and chief investment officer of global equity beta solutions for State Street Global Advisors; James “Jim” Loree, a transformational leader with four decades of experience who recently served as president and CEO of Stanley Beck and Decker, Inc.; and James C. Pappas., founder of JCP Investment Management.
Providence, R.I.-based UNFI delivers a wide variety of products to customer locations throughout North America, including natural product superstores, independent retailers, conventional supermarket chains, e-commerce retailers and foodservice customers. The largest publicly traded grocery distributor in America, the company is No. 20 on The PG 100, Progressive Grocer’s 2023 list of the top food and consumables retailers in North America.