Dive Brief:
- United Natural Foods, Inc. (UNFI) recorded a net sales increase of 10% to $8.2 billion during its fiscal fourth quarter compared to the same period last year, reversing a negative sales trend that has been ongoing since Q2, the company reported Tuesday. Net sales for FY 2024 increased 2.3% year-over-year to nearly $31 billion.
- The company posted a net loss of $37 million during Q4, about half the net loss posted at the same time last year. In Q4 the company’s retail sales grew 3.1% year-over-year and its “supernatural” segment sales, which includes Whole Foods Market, rose by nearly 19%.
- After more than two years of unsteady financial results, UNFI announced that it is initiating a three-year financial recovery plan and has also decided to close two distribution centers.
Dive Insight:
Since reporting a drastic drop in profitability during the second quarter of 2023, UNFI has been focused on finding ways to focus on “controllable variables” to improve operations and financial results, UNFI CEO Sandy Douglas said during an investor call Tuesday morning.
UNFI’s three-year business plan, which will take effect in the company's fiscal year 2025, will look to drive faster growth of its “higher-margin natural business compared to our conventional business,” Douglas said.
The second margin driver in the plan is linked to UNFI’s “multi-year efficiency initiatives” that the company introduced in Q3. And finally, the company will focus on growing its digital and professional services.
“[O]ur new strategy and three-year financial objectives are expected to result in revenue that is roughly flat as organic growth offsets the revenue impact of network optimization,” Douglas said.
UNFI also announced the consolidation of its distribution network by shuttering its Billings, Montana, and Bismarck, North Dakota, distribution centers. The company expects this move to generate cash, save on future operating costs and provide a better customer and supplier experience, Matteo Tarditi, UNFI’s president and chief financial officer, said during the earnings call. Currently, UNFI doesn’t have any further closure plans, but said it will “continue to evaluate other opportunities along these lines,” Tarditi added.
Looking ahead to FY 2025, UNFI expects capital investments to be around $300 million, a decline of $70 million compared to FY 2024.
Building on this, UNFI will reduce its investment in working capital and look at returning to pre-pandemic levels for how long it takes to sell inventory, Douglas said.
To keep this plan on track, UNFI created a value delivery office that reports to Tarditi and oversees project management and problem-solving on “key initiatives and the progress being made against defined timelines and expected benefits,” Douglas said. The group is also charged with ensuring “lean management practices and structural process improvements” are achieved, he added.
For FY 2025, UNFI forecasts flat net sales between $30.3 billion and $30.8 billion and that its net loss will be between $41 million and $3 million.
