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Revenue: $7.8 billion, roughly flat compared to last year.

Natural Segment Growth: 11% increase, driven by strong unit growth.

Conventional Segment Sales Decline: 12% decrease, primarily due to transition out of Allentown distribution center.

Retail Sales Decline: 5% decrease, partly due to store closures.

Same-Store Sales Decline: 3% decrease.

Gross Margin Rate: 13.4%, up 20 basis points from the prior year.

Operating Expense Rate: 12.7% of net sales, improved from 12.9% last year.

Adjusted EBITDA: $167 million, up nearly 25% year-over-year.

Adjusted EBITDA Margin: 2.1% of net sales, up 40 basis points year-over-year.

Adjusted EPS: $0.56, compared to $0.16 last year.

Free Cash Flow: Use of $54 million, improved by about $105 million from last year.

Net Leverage Ratio: Reduced to 3.2 times, down by 1 full turn from last year.

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Release Date: December 02, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

United Natural Foods Inc (NYSE:UNFI) delivered solid results in the first quarter of fiscal 2026, with adjusted EBITDA and free cash flow significantly above prior year levels.

Net leverage declined approximately 1 turn compared to the prior year quarter, indicating improved financial health.

The company experienced sustained growth in its Natural Products segment, which largely offset declines in the Conventional Products segment.

UNFI's network optimization efforts, particularly at the Allentown distribution center, proceeded ahead of schedule, contributing to improved profitability.

The implementation of advanced supply chain technologies like Relex has improved fill rates and inventory effectiveness, enhancing operational efficiency.

Sales in the Conventional Products segment declined by about 12%, primarily due to the transition out of the Allentown distribution center.

Retail sales fell 5% in the quarter, partly due to store closures over the past 12 months.

Same-store sales declined 3%, reflecting challenges in the retail environment.

The operating environment remains highly dynamic and challenging, especially for traditional grocers.

The company faces ongoing pressure in the Conventional segment due to consumer sentiment challenges and competitive pressures.

Q: Sandy, can you discuss the growth in the Natural segment and the impact of fill rates on this growth? A: J. Alexander Douglas, CEO: The growth in our Natural segment has been positive, driven by larger drop sizes and increased business from larger customers. Fill rates have improved significantly due to technology reintroduction and the implementation of Relex, which has led to sequential improvements over the past years. We see further opportunities for improvement in fill rates, which are crucial for our customers.

Q: How sustainable is the gross margin strength observed in Q1, and what role did network optimization play? A: Giorgio Matteo, CFO: The gross margin rate increased by 30 basis points to 13.6% due to strong natural growth, supplier funds, and shrink management. Network optimization contributed to this improvement, and while procurement gains were temporary, the $167 million EBITDA is a good recurring run rate. We expect continued benefits from merchandising and digital services.

Q: Can you elaborate on the competitive environment in retail for both Conventional and Natural segments? A: J. Alexander Douglas, CEO: The retail environment is highly competitive, with discounting being compelling due to consumer stress. However, this has led to innovation across our customer base. Retailers focusing on differentiation and innovation are growing strongly. We aim to support them in winning this strategic and operational battle.

Q: How has the Allentown transition affected Conventional sales, and what is the outlook for consumer health in Natural and Organic segments? A: J. Alexander Douglas, CEO: The Allentown exit was a significant factor in the decline of Conventional sales, but it supports improved profitability. The consumer environment has been challenging, but we are focused on helping our customers remain competitive. In the Natural segment, growth remains strong, and we expect it to continue as a mid-single-digit grower.

Q: What is the current status of customer attrition following the cyber attack, and how has it impacted your business? A: J. Alexander Douglas, CEO: Customer attrition has been minimal, with one customer joining and another leaving. We have been fortunate in retaining customers and are working hard to maintain this. Our focus remains on serving our customers effectively and being their best choice.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.