United Natural Foods Inc. (UNFI) delivered its third consecutive quarter of improved profitability as the wholesale distributor continues to try to take steps in the right direction.
During its third-quarter earnings call on Wednesday, UNFI revealed a net sales year-over-year decrease of 0.1% to $7.5 billion and a net loss of $21 million. The company’s full-year outlook for net income was also lowered.
Adjusted EBITDA decreased 18.2% to $130 million.
UNFI stock price was up over 5.5% mid-afternoon on Wednesday.
UNFI continues to reset profitability and strengthen its foundation while revamping its long-term strategy.
The distributor is improving volumes and had a third sequential quarter of accelerating adjusted EBITDA primarily due to disciplined expense management, which includes supply chain efficiencies.
“We delivered another quarter in line with our fiscal 2024 plan,” said UNFI CEO Sandy Douglas during the earnings call. “Our ongoing board- and management-led financial review is also nearing an important milestone, which is our new multi-year strategic plan that will begin fiscal year 2025.”
Douglas added that the updated strategy is expected to generate free cash flow approaching $100 million in fiscal year 2025, as well as stable and dependable profit and cash flow growth, with improving returns on capital and declining net leverage on a multi-year basis.
Gross profit in the third quarter was $1 billion, a 2% increase ($20 million) year over year.
UNFI landed a key contributor to future sustainability in late May when it extended its contract with Whole Foods. The two agreed on an eight-year extension as UNFI will serve as the retailer’s primary distributor. The prior contract with Whole Foods was set to expire in September 2027.
UNFI also launched its own retail media network — the UNFI Media Network — 24 hours after the Whole Foods deal.
The UNFI Media Network, powered by retail solutions company Swiftly, will be available to UNFI’s network of more than 30,000 retail customer locations and approximately 11,000 brand partners.
UNFI still expects net sales for fiscal year 2024 to fall in the $30.5 billion to $31 billion range, but it is now forecasting net loss to be between $85 million and $109 million. Previously net loss was set at $65 million to $101 million.