UNFI reports better results as recovery efforts accelerate

Diving brief:

• United Natural Foods, Inc. (UNFI) reported first quarter net sales that were up 4.2% over one yearto $7.9 billion, the food retailer and wholesaler announced Tuesday.
• The company reported a net loss of $21 million in the first quarter, down from the $39 million loss it suffered during the same period last year.
• UNFI’s performance strengthened during the quarter on several fronts as it executes a multi-year plan to rebuild its profitability and overall financial health, executives said at a news conference. call for results Tuesday morning.

Dive overview:

UNFI made substantial progress during the first quarter to improve its service to customers and suppliers while reducing costs, CEO Sandy Douglas told investors Tuesday.

The company, which is working to turn around its operations after foreseeing problems hammered out his results two years ago, focused on reducing waste, according to Douglas. Over the past five quarters, UNFI has reduced shrinkage to pre-COVID-19 levels, and is taking steps to further improve this metric while strengthening its capabilities to better serve retailers, said he declared.

UNFI saw its adjusted earnings before interest, taxes, depreciation and amortization increase nearly 15% year over year during the quarter and has now seen this profitability measure improve for five consecutive quarters, Douglas added.

“As we execute on our plans, we become even more confident in our multi-year goals, our long-term trajectory, and our ability to add value to retailers and suppliers across the retail ecosystem food retail,” Douglas said.

UNFI has also seen its supply chain efficiencies improve over the past three quarters, President and CFO Matteo Tarditi said on the call. The number of cases per hour moved by UNFI during the first quarter increased by 5% compared to the same period last year, Tarditi said.

UNFI also raised its outlook for the full year. The company now expects its fiscal 2025 net revenue to be 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 9% from last year.

Tarditi added that UNFI’s efforts to decentralize its procurement processes have played a key role in helping the company improve its operations, noting that it has benefited from empowering employees closest to its customers to make decisions.

UNFI also saw improvements in its retail operations during the first quarter, Douglas said, noting that the company was working with franchisees who operate stores under its Cub Foods brand in the Minneapolis area to strengthen the banner.

“We are, I would say, optimistic, but (in the) early days of the retail recovery in the Twin Cities,” Douglas said, adding that “there is a lot of positive energy for what we can do with Cub, even if it’s been sweet for a few years.

Douglas added that UNFI is open to selling Cub, but believes it is better to try to improve the banner rather than give it away.

UNFI’s retail division reported first-quarter sales down 3.3%, to $586 million. Sales at the company’s supernatural division, which includes its business with Whole Foods Market, rose nearly 14 percent, to about $1.8 billion.