United Natural Foods, Inc.

UNFI said Q3 sales were approximately $7.7 billion, down 4.2% year over year, including about 450 basis points of impact from accretive optimization actions. Gross margin was 13.6%, up about 20 basis points year over year, while adjusted EBITDA increased nearly 17% to $183 million and adjusted EBITDA margin was about 2.4%, up around 40 basis points. Adjusted EPS was $0.77 versus $0.44 last year. Free cash flow was $54 million in the quarter and $243 million year to date, up $90 million year over year. Net leverage improved to 2.5 turns, with net debt of $1.63 billion, the lowest since fiscal 2018. For fiscal 2026, management said it is reiterating outlook midpoints across all outlook metrics while narrowing expected ranges for net sales, net income, EPS, adjusted EBITDA and adjusted EPS; it also still expects investment spend to ramp in the back half of the year. Management said the midpoint for adjusted EBITDA remains $695 million and said the outlook embeds fuel pressure and incremental investment, while full-year guidance is being maintained despite the dynamic backdrop.

Sandy Douglas framed the quarter as steady progress on UNFI’s value-creation strategy, emphasizing stronger profitability, free cash flow, and balance-sheet flexibility. He said the company is building capabilities in customer stewardship, merchandising, digital services, private brands, technology, next-generation supply chain, and productivity, and pointed to early benefits from AI-based planning, fleet management, and warehouse systems. His tone was constructive and confident, with repeated emphasis that the strategy is still early but has a long runway.

Matteo Tarditi highlighted the financial improvements in Q3: sales of about $7.7 billion, gross margin of 13.6%, adjusted EBITDA of $183 million, adjusted EPS of $0.77, and free cash flow of $54 million. He noted YTD free cash flow of $243 million, net leverage of 2.5 turns, and net debt of $1.63 billion; he also said UNFI repurchased nearly 1 million shares for about $38 million at an average price of $37.88. On capital structure, he said the company made a voluntary $115 million prepayment on senior notes, reducing the 2028 maturity to $385 million, and refinanced its $2.53 billion ABL facility to April 2031, cutting annual borrowing cost by about $2 million. He also said CapEx over the last four years, including 2026 guidance, would total about $1.25 billion, or roughly 1% of sales, and that the company is still expected to spend more on safety, maintenance, technology, and supply-chain modernization.

Analysts focused on how much of the sales decline was “real” versus the result of optimization and project work, and management said underlying sales excluding those items were in line with the low-single-digit growth of the target market. They also pressed on consumer health, fuel inflation, and whether Q4 EBITDA would have been higher without fuel pressure; management said consumers remain value-focused, especially under SNAP and energy pressure, and that it is using hedges, contractual sharing, and route optimization to manage fuel. Several questions centered on fiscal 2027, and management said the company expects wholesale to return to low-single-digit growth as optimization cycles, while EBITDA growth should be supported by market growth, capability expansion, and ongoing productivity gains.