UNFI to restructure operating regions, cut 150 jobs

Dive Brief:

United Natural Foods, Inc. (UNFI) announced Tuesday that it is consolidating its operating structure from four regions to three — East, Central and West.
As a result of this restructuring, the grocery distributor and retailer plans to eliminate around 150 roles, mainly in management or supervisory positions.
“These changes are in step with our transformation plan,” UNFI CEO Sandy Douglas said in a statement. “The regional realignment will decrease layers of administrative management, increase leaders’ span of geographic responsibility, better align us to serve customers with less complexity, and support faster decision making. These changes are also intended to make our company more efficient and more profitable.”

Dive Insight:

UNFI’s announcement that it will streamline its operations and reduce the size of its corporate workforce comes less than a week after the company reported a sharp decline in profitability and slashed its projections for the current fiscal year for the second quarter in a row.

The company said the actions it outlined Tuesday stem from its decision in March to appoint Erin Horvath as chief operating officer and Louis Martin as president of wholesale, moves it said were intended to strengthen its leadership structure, improve deployment of resources and help it better serve customers and suppliers.

The company said its new East Region will include its operations in states from Maine to Florida and “as far west” as Tennessee, where it has 22 distribution centers and more than 10,000 customers. The Central Region includes 21 states from the Mississippi River to the Rockies that are home to 16 distribution centers and around 9,000 customers, while the West Region covers 10 states from Utah to Alaska, where UNFI runs 14 distribution facilities and has about 9,000 customers.

UNFI has been hampered by a range of obstacles that have hurt it financially and driven down its stock price, including competition from mass merchants like Walmart, weak retail sales and challenges melding Supervalu, which the company bought in 2018, with the rest of its business.

Speaking during UNFI’s third-quarter earnings call last Wednesday, Douglas expressed “deep disappointment” over the company’s weak results and promised to take decisive action to shave costs and make UNFI more nimble.

UNFI is “actively evaluating paths to a more efficient administrative structure, which should reduce SG&A,” Douglas said during the call, referring to selling, general and administrative expenses. “Importantly, we believe this more streamlined organizational approach will also make us more adaptable, will speed decision-making, and enhance communication and collaboration.”

UNFI is in the midst of a multi-prong “transformation agenda” introduced during the company’s second-quarter earnings call in March, when Douglas said the company realized that it did not have full visibility into its business data and forecasting abilities, in part because its technology was out of date.