Dive Brief:
- United Natural Foods, Inc. (UNFI) posted net sales during the first quarter that were up 4.2% year over year, to $7.9 billion, the grocery retailer and wholesaler announced Tuesday.
- The company recorded a net loss of $21 million in Q1, down from the $39 million loss it incurred during the same period last year.
- UNFI’s performance strengthened during the quarter on multiple fronts as it executes a multi-year plan to rebuild its profitability and overall financial health, executives said during an earnings call Tuesday morning.
Dive Insight:
UNFI made substantial progress during the first quarter toward improving its service to customers and suppliers while also cutting costs, CEO Sandy Douglas told investors Tuesday.
The company, which has been striving to turn its operations around after forecasting issues hammered its results two years ago, has focused on reducing waste, according to Douglas. Over the past five quarters, UNFI has cut shrink to the levels it saw before the COVID-19 pandemic, and it is taking steps to improve that metric further while also building its capacity so it can better serve retailers, he said.
UNFI saw its adjusted earnings before interest, taxes, depreciation and amortization increase by almost 15% year over year during the quarter and has now seen that measure of profitability improve for five straight quarters, Douglas added.
“As we execute, we become even more confident in our multi-year objectives, long-term trajectory and in our ability to add value for retailers and suppliers across the food retail ecosystem,” Douglas said.
UNFI has also seen its supply chain efficiency improve for the past three quarters, President and CFO Matteo Tarditi said during the call. The number of cases per hour UNFI moved during Q1 was up 5% compared with the same period last year, Tarditi said.
UNFI also raised its outlook for the full year. The company now expects net sales for fiscal 2025 to come in between $30.6 billion and $31 billion, up from a previous range of $30.3 billion to $30.8 billion. The company also expects adjusted EBITDA to increase by 9% compared with last year.
Tarditi added that UNFI’s effort to decentralize its procurement processes has played a key role in helping the company improve its operations, noting that it has benefited by empowering employees who are closer to its customers to make decisions.
UNFI also saw improvements in its retail operations during the first quarter, Douglas said, noting that the company has been working with franchisees who run stores under its Cub Foods brand in the Minneapolis area to strengthen the banner.
“We’re, I would say, optimistic, but [in the] early days of the retail turnaround in the Twin Cities,” Douglas said, adding that “there’s a lot of positive energy for what we can do with Cub, even though it’s been soft for a couple years.”
Douglas added that UNFI is open to selling Cub, but believes that it is better off trying to improve the banner rather than divest it
UNFI's retail division posted sales during Q1 that were down 3.3%, to $586 million. Sales in the company's supernatural division, which includes its business with Whole Foods Market, rose by almost 14%, to about $1.8 billion.
