UNFI Off to ‘Solid Start’ in Q1
For its 13-week first quarter of fiscal 2025 ended Nov. 2, distributor United Natural Foods Inc. (UNFI) reported a net sales increase of 4.2% to $7.9 billion, a net loss of $21 million and a loss per diluted share (EPS) of 35 cents, an adjusted EBITDA increase of 14.5% to $134 million, and an adjusted EPS increase to 16 cents.
According to UNFI, the net sales increase from the year-ago period was primarily driven by a nearly 2% increase in wholesale unit volumes, including the benefit of new business with existing and new customers, as well as inflation. Meanwhile, the company managed to narrow its net loss and net loss per EPS in Q1 2025 from $39 million and 67 cents, respectively, in the first quarter of fiscal 2024. Adjusted EPS for Q1 2024 was 4 cents.
Gross profit in Q1 2025 was $1.0 billion, an increase of $8 million, or 0.8%, versus the year-ago period. The gross profit rate in Q1 2025 was 13.2% of net sales compared with 13.6% of net sales last year. UNFI attributed this decline mainly to lower product margin rates and business mix, partly offset through supplier programs and lower shrink.
Attributing its adjusted EBITDA growth and $170 million improvement in free cash flow to improvement initiatives and lean management routines undertaken during the quarter, UNFI raised its full-year outlook for all financial metrics other than capital spending, which remains at around $300 million. Anticipated net sales are now $30.6 billion-$31.0 billion, from $30.3 billion-$30.8 billion.
The company also noted that it was continuing to execute upon its recently revealed multi-year plan, with value creation initiatives leading to new business gains with existing customers, a revamped commercial go-to-market strategy, and what it deemed “significant” network optimization progress across its distribution network.
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During Q1, UNFI also revealed the pending closure of its Ft. Wayne, Ind., distribution center, completed the closures of the Bismarck, N.D., and Billings, Mont., distribution centers; and moved natural volumes from York, Pa., to a larger, soon-to-be automated Manchester, Pa., distribution center. It additionally created incremental efficiencies through further organizational streamlining.
“Our performance this quarter represents a solid start to fiscal 2025 and serves as an early proof point of our recently introduced multi-year strategic plan predicated upon bringing value to our customers and suppliers while enhancing our efficiency, improving free cash flow and reducing net leverage,” said UNFI CEO Sandy Douglas. “We’re encouraged by positive volume trends attributable to new business with existing customers and new customer additions. This volume strength primarily reflects successful execution by our customer base, supported by UNFI’s value-added positioning and unique go-to-market strategy. We remain focused on operational execution, driving efficiencies, and delivering strengthening service levels to customers and suppliers during the important holiday selling season.”
Providence, R.I.-based UNFI delivers a wide variety of products to more than 30,000 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. 22 on The PG 100, Progressive Grocer’s 2024 list of the top food and consumables retailers in North America.
