United Natural Foods(US:UNFI)2025-12-02 21:32Financial Performance - Net sales for the first quarter of fiscal 2026 decreased by approximately 0.4% to $7,840 million from $7,871 million in the first quarter of fiscal 2025, primarily driven by a decrease in unit volumes, partially offset by inflation [124]. - Gross profit increased by $13 million, or 1.3%, to $1,051 million for the first quarter of fiscal 2026, with a gross profit margin of 13.4% compared to 13.2% in the prior year [129]. - Operating expenses decreased by $19 million, or 1.9%, to $996 million, representing 12.7% of net sales, down from 12.9% in the first quarter of fiscal 2025, due to cost-saving initiatives [130]. - Adjusted EBITDA increased by $33 million, or 24.6%, to $167 million for the first quarter of fiscal 2026, compared to $134 million in the prior year [138]. - Net loss attributable to United Natural Foods, Inc. was $4 million, or $0.06 per diluted common share, compared to a net loss of $21 million, or $0.35 per diluted common share, in the first quarter of fiscal 2025 [136]. Cost and Inflation - The company reported a product cost inflation of approximately 3% in Q1 fiscal 2026 compared to Q1 fiscal 2025 [106]. - Natural net sales increased by approximately 10.5% to $4,240 million, driven by higher unit volumes and inflation, while conventional net sales decreased by 11.7% to $3,325 million due to lower unit volumes [124][126][127]. Strategic Initiatives - The termination of a supply agreement in the East region is expected to accelerate progress towards long-term strategic objectives, with the affected business accounting for approximately $1 billion in annual sales [102]. - The company plans to continue investing in its Retail segment, focusing on customer-facing merchandising initiatives and technology [105]. - The company is focused on optimizing its cost structure and reducing net working capital [96]. Debt and Liquidity - Total liquidity as of November 1, 2025, was $1,327 million, consisting of $1,289 million in unused credit and $38 million in cash and cash equivalents [149]. - Total debt increased by $58 million to $1,920 million as of November 1, 2025, primarily due to net borrowings under the ABL Credit Facility [149]. - Interest expense, net decreased to $34 million from $36 million in the prior year, primarily due to lower outstanding long-term debt balances [134]. Capital Expenditures and Investments - Capital expenditures for the first quarter of fiscal 2026 were $16 million, a decrease of $33 million compared to $49 million in the first quarter of fiscal 2025 [154]. - Fiscal 2026 capital and cloud implementation spending is expected to be approximately $250 million, focusing on technology platform investments [155]. Pension and Other Obligations - The company expects to contribute approximately $50 million to multiemployer pension plans in fiscal 2026, subject to collective bargaining outcomes [162]. - Restructuring, acquisition, and integration-related expenses increased by $10 million to $22 million, primarily due to adjustments related to multiemployer pension plan withdrawal liabilities [131]. Operational Metrics - The company operates 70 grocery stores, including 53 Cub Foods and 17 Shoppers stores, as of November 1, 2025 [104]. - The company has 49 distribution centers across North America, representing approximately 28 million square feet of warehouse space [95]. - The company’s diversified customer base includes over 30,000 customer locations, ranging from large grocers to smaller retailers [95]. - The company is actively monitoring macroeconomic and geopolitical impacts on consumer behavior and discretionary income levels [100]. Tax and Regulatory - The effective tax rate for the first quarter of fiscal 2026 was a benefit rate of 55.6% on pre-tax loss, compared to 16.7% in the prior year, influenced by discrete tax benefits and a solar array tax credit [135]. - The company has not been subject to the fixed charge coverage ratio covenant under the ABL Loan Agreement as of the filing date of the Quarterly Report [150]. Share Repurchase - The company did not repurchase any shares in the first quarter of fiscal 2026, with $138 million remaining under the 2022 Repurchase Program [165].