Dive Brief:
- United Natural Foods, Inc. (UNFI) saw its net sales rise by nearly 5% year over year during the second quarter of fiscal 2025, to $8.2 billion, driven by strength in its natural products business, the grocery retailer and wholesaler reported Tuesday.
- The company posted a quarterly net loss of $3 million, an improvement from the $15 million loss it recorded during Q2 of 2024.
- UNFI’s retail division lost momentum in its latest quarter while its restructured wholesale operations moved ahead.
Dive Insight:
While UNFI’s supermarket business saw its sales sag in Q2 by more than 3% compared with the same period last year, that decline was due largely to the closure of five stores over the past 12 months, President and CFO Matteo Tarditi said during an earnings call on Tuesday.
Identical store sales were down by a fraction of a percentage point, an improvement over the first quarter that reflects gains at UNFI’s Cub Foods chain, which saw positive comps during Q2, Tarditi said. Still, adjusted EBITDA for the company’s retail business dropped by about $2 million.
By comparison, UNFI’s wholesale business generated an increase in adjusted EBITDA of approximately $36 million as volumes moved ahead by 3%, Tarditi said. The company announced in January that it had restructured its wholesale operations into two divisions in an effort to increase the company’s profitability.
UNFI’s conventional business, meanwhile, generated a sales increase of about 2%, according to Tarditi.
The company raised its guidance for the full fiscal year. It expects net sales to fall between $31.3 billion and $31.7 billion and projects that earnings per share could turn positive.
UNFI — which has been working for the past several quarters to recover from operational missteps that sharply dented its standing with investors — also reported progress in its quest to improve efficiency during its latest quarter, which ended Feb. 1.
The company has improved safety, delivery quality and productivity over the past six months at facilities where it has implemented lean management practices, and has recorded an almost 10% improvement in the number of cases per hour it handles, Tarditi said.
While the company saw weakness in its gross margins, its success in lowering costs more than offset that decline, Tarditi added.
“We are laser focused on improving processes and removing waste so we're better able to bring value and improving service levels to our customers and suppliers,” Tarditi said, adding that its teams “are strengthening their ability to problem solve, to effectively identify and document countermeasures, and a culture of championing breakthrough thinking has been embedded across our organization.”
Inflation during the second quarter came in at about 1.5%, about 1 percentage point lower than the second quarter of 2024, Tarditi said.
UNFI also said Tuesday that it has been reducing its debt more quickly than expected.
The company has reached a deal to sell its distribution center in Billings, Montana, which closed last year, and plans to use the proceeds from that transaction to further reduce the amount it owes creditors, CEO Sandy Douglas said during the call. UNFI’s former distribution facility in Bismarck, North Dakota, and its recently shuttered distribution center in Fort Wayne, Indiana, are currently on the market, he added.
UNFI’s stock price has more than doubled over the past 12 months but is off significantly in 2025. The company's stock price declined more than 5% Tuesday morning.
