This article first appeared on GuruFocus .
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Revenue:Fourth quarter sales were over $7.6 billion, down less than 1% year-over-year; full-year sales were approximately $31.2 billion.
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Adjusted EBITDA:Fourth quarter adjusted EBITDA was $172 million; full-year adjusted EBITDA was $701 million, near the top of guidance, with a 27% growth rate.
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Adjusted EPS:Fourth quarter adjusted EPS was $0.69; full-year adjusted EPS was $2.65, above the high end of guidance.
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Gross Margin:Fourth quarter gross margin rate was 13.7%, up approximately 30 basis points year-over-year.
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Operating Expenses:Fourth quarter operating expenses were approximately 12.9% of net sales.
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Free Cash Flow:Fourth quarter free cash flow was $80 million; full-year free cash flow was $323 million, up $84 million from fiscal 2025.
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Net Leverage Ratio:Reduced to 2.2 times at fiscal year-end, a 1.1 turn improvement from fiscal 2025.
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Net Debt:Less than $1.6 billion at fiscal year-end, the first time since fiscal 2018.
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Retail Same-Store Sales:Fourth quarter comp same-store sales decline improved by approximately 150 basis points from the third quarter.
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Segment Sales (Natural):Underlying sales in the Natural product segment outperformed the broader market.
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Segment Sales (Conventional):Underlying sales declined mid-single digits in the Conventional product segment.
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Retail Sales:Total Retail sales were lower by 8%, reflecting planned strategic store actions.
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Share Repurchases:Repurchased about 420,000 shares for approximately $21 million in Q4; total fiscal year repurchases were about 1.25 million shares for approximately $50 million.
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Fiscal 2027 Guidance:Sales expected between $31.2 billion and $31.8 billion; adjusted EBITDA expected between $730 million and $780 million; adjusted EPS expected between $3 and $3.50 per share.
Release Date: September 08, 2026
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
Positive Points
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United Natural Foods Inc ( NYSE:UNFI ) delivered strong fiscal 2026 results, with adjusted EBITDA growing 27% to $701 million and free cash flow reaching a record $323 million.
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The company significantly strengthened its balance sheet, reducing net leverage to 2.2 times, a full turn improvement year-over-year, and net debt fell below $1.6 billion for the first time since fiscal 2018.
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UNFI's fiscal 2027 guidance is robust, projecting high single-digit adjusted EBITDA growth and an adjusted EPS increase of 23% at the midpoint, exceeding its Investor Day targets.
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The company is making solid progress on its operational efficiency initiatives, including the rollout of Lean Daily Management to 44 distribution centers and the deployment of an AI-powered supply chain platform, which has driven four consecutive quarters of improvement in fill rates and on-time deliveries.
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UNFI is returning capital to shareholders, having repurchased shares and announcing a new $200 million share repurchase program, reflecting confidence in its long-term strategy.
Negative Points
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United Natural Foods Inc ( NYSE:UNFI ) reported a decline in fourth-quarter sales of less than 1%, impacted by planned network optimization actions, the unwind of short-term project work, and the cycling of last year's cyber event.
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The company's Conventional product segment experienced a mid-single-digit decline in underlying sales, and its Retail segment saw total sales fall by 8% due to strategic store actions.
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UNFI faces ongoing headwinds from higher fuel costs, which it expects to continue impacting results, although it is employing countermeasures like hedging and route optimization.
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The company's fiscal 2027 sales outlook is modest, with growth expected to be weighted to the second half of the year, and sales are projected to decline in the first quarter as it cycles prior optimization actions.
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The transition to a new automated distribution facility in Illinois is in its early stages and has experienced some 'growing pains,' indicating potential short-term operational disruptions.
Q & A Highlights
Q: Can you provide more color on the 150 basis points of short-term project work and the top-line outlook by division for the upcoming year? Are there any other optimization actions contemplated that are not in the guide? A: Matteo Tarditi (President and COO) explained that a large natural retailer asked UNFI to help with a strategic transition, providing fresh business as a bridge. Sandy Douglas (CEO) added that this was a profitable and appropriate use of resources, and the company is now cycling through it. For fiscal 2027, the company expects to return to growth, with the first quarter still impacted by lapping optimization actions before returning to profitable growth in the second half.
Q: Can you provide more color on the segment-level performance, specifically whether Conventional and Retail top lines can flatten out in the back half, and the expected contribution from Natural versus Conventional? A: Matteo Tarditi (President and COO) noted that in fiscal 2026, Natural grew top line about 7% and EBITDA 19%, while Conventional underwent network optimization and grew EBITDA by more than 50%. For 2027, the low single-digit growth guidance is rooted in customer strength and commercial capabilities, with natural, organic, and specialty products expected to grow faster than the average market. Sandy Douglas (CEO) added that while Conventional year-over-year growth may be negative, the combination of both product sets adds value to customers and drives the growth proposition.
Q: How do higher fuel costs impact the 2027 and 2028 targets, and what is the magnitude of the incremental headwind? A: Matteo Tarditi (President and COO) confirmed a $5 million net fuel impact per quarter is embedded in the high-confidence outlook for 2027. He highlighted countermeasures, including fuel hedges, customer and supplier contractual escalations with a lag and phase-in, and a continuous focus on route optimization to reduce miles per delivery and fuel consumption.
Q: Should we assume you got back 100% of the cyber incident impact in the quarter, and can you share color on the timing and magnitude of new business onboarding? A: Sandy Douglas (CEO) stated the company has completely cycled the cyber event as it enters the first quarter. Regarding new business, he noted the pipeline includes earning bigger shares of existing customers' business and new banner relationships. The first quarter will still have heavy cycling from optimization, but the second half of the year should be fully back to growth, reflecting the staging of both the pipeline and optimization cycling.
Q: What are you seeing in food inflation today, what is embedded in the FY 2027 outlook, and how are you thinking about forward buying opportunities? A: Matteo Tarditi (President and COO) stated the strategy is to keep prices low, stable, and predictable. The fiscal 2027 outlook embeds a low single-digit inflation assumption, recognizing a dynamic environment including energy and logistics costs. He noted the $150 million adjusted EBITDA growth in 2026 was largely driven by productivity and network optimization, with only a residual part from procurement gains. The 2027 outlook has no reliance on out-of-pattern procurement gains.
Q: Can you provide more detail on trends in the retail business, the competitive environment, and consumer behavior? A: Sandy Douglas (CEO) described retail initiatives as early days, with a new management team in place and a strategy in early implementation. The company is seeing sequential improvement in top-line and bottom-line performance. He noted that natural, organic, and specialty players, as well as differentiated grocers and discounters, are all gaining share. UNFI's focus is on helping retailers, particularly those less differentiated like Cub, create winning strategies on value, assortment, and unique experiences.
Q: How is Natural fill rate progressing compared to Conventional, and where do you see the opportunity? A: Sandy Douglas (CEO) noted fill rates are improving at about the same rate in both segments, though Conventional rates are higher due to fewer SKUs and more stable volume. Natural products face challenges due to innovation and slow-moving SKUs. UNFI has created an enterprise-level project on fill rate, using technology like RELEX and AI to improve demand understanding and ordering patterns. He considers this the biggest improvement opportunity and expects continued progress.
Q: Are you seeing any shift in competitive intensity on the distribution side given recent pressures in grocery? A: Sandy Douglas (CEO) stated the wholesale industry remains very competitive, with some incremental segmentation in where players focus. UNFI operates an efficient, low-margin business where productivity and operational improvement drive margin expansion, not price increases. The company remains focused on its subsegment of the market, supporting customers' strategies with particular needs and capabilities.
Q: Can you walk through how Lean 2.0 differs from the initial deployment and where you see the most opportunity for incremental improvement? A: Matteo Tarditi (President and COO) explained that Lean 2.0 will go deeper into management routines, strengthening problem-solving and daily management programs, and into continuous improvement (kaizen) to eliminate waste. The initial phase was voluntary across 44 DCs; the next phase will prioritize based on customer feedback, supplier impact, and out-of-stock data to identify the largest opportunities. Sandy Douglas (CEO) added that this approach demonstrates the benefit of having sales, supply chain, Lean, and IT report to the COO.
Q: How does UNFI perform in an environment with volume pressures from GLP-1s and building price pressures across the industry? A: Sandy Douglas (CEO) acknowledged macros impacting everyone, including fuel prices, SNAP program reductions, and GLP-1s, which reduce volume but increase demand for healthier food. He noted retailers respond differently, and UNFI's exposure is tied to how its $90 billion target market retailers act. He emphasized that winners win regardless of the environment, and UNFI's focus on improving service and efficiency is particularly important in challenging times.
Q: How would you prioritize capital over a three-to-five-year period: organic growth, M&A, buybacks, or dividends? A: Sandy Douglas (CEO) stated the current focus is on deleveraging, investing in the business for organic performance, and opportunistic share buybacks. He noted a bias toward organic improvement due to the significant opportunity seen. Matteo Tarditi (President and COO) added that fiscal 2027 CapEx is planned at about $300 million
For the complete transcript of the earnings call, please refer to the full earnings call transcript .
