Gross profit totaled $3.8 billion, up 3.9%, while gross margin increased to 18.3%. Adjusted operating expenses were $3 billion, or 14.4% of sales, a 15-basis-point increase from the prior year. Cheung said the increase reflected planned investments (fleet, building expansion, and sales headcount) and the lapping of $16 million in incentive compensation from the year-ago quarter, which he said negatively impacted adjusted operating expenses by about 60 basis points and adjusted EPS growth by about 270 basis ...

Core Insights - United Natural Foods, Inc. (UNFI) reported a widening performance gap between its Natural and Conventional segments, with consolidated sales decreasing by 0.4% year over year, highlighting divergent underlying drivers across the two businesses [1] Segment Performance - The Natural Products segment achieved a sales growth of 10.5%, reaching $4,240 million, significantly outperforming the broader natural and organic market due to strong unit growth, new business wins, and sustained demand for natural, organic, and specialty products [2][7] - In contrast, the Conventional Products segment experienced an 11.7% decline in sales to $3,325 million, primarily due to UNFI's strategic exit from the Allentown, PA distribution center as part of its network optimization strategy, which, while impacting top-line performance, positively affected profitability and free cash flow [3][7] Margin and Profitability - The Conventional segment's EBITDA margins expanded during the fiscal first quarter, driven by network optimization, supplier programs, and ongoing shrink reduction, although some margin improvement was linked to short-term procurement benefits [3] - The overall quarter illustrated a growing divergence between the two segments, with Natural supporting top-line growth amid steadier demand trends, while Conventional focused on efficiency and cash flow rather than volume [4] Valuation Metrics - UNFI currently trades at a forward 12-month P/E ratio of 18.28, which is above the industry average of 14.1 and the sector average of 16.01, indicating a noticeable premium relative to comparable peers and the sector overall [9]

Core Insights - Flowers Foods, Inc. (FLO) reported a 3% year-over-year increase in net sales to $1.227 billion, driven by the Simple Mills acquisition, but faced continued pressure on profitability with declining margins [1][8] Financial Performance - Adjusted EBITDA decreased by 11.4% to $118.1 million, with the adjusted EBITDA margin contracting by 160 basis points to 9.6% [2] - Adjusted net income fell by 29.8% to $48.7 million, and adjusted diluted earnings per share dropped by 30.3% year over year to 23 cents [2] - Gross margin declined by 190 basis points year over year to 47.9%, attributed to lower sales price mix, reduced production volumes, and increased outside purchases related to the Simple Mills acquisition [3] Cost Structure - Selling, distribution, and administrative expenses rose to 38.8% of net sales, an increase of 10 basis points from the prior year, driven by higher workforce-related costs and wage inflation [4] - Adjusted SD&A improved to 38.3% of net sales, a decrease of 30 basis points when excluding items affecting comparability [4] Strategic Actions - The company is taking steps to address margin pressure, including aligning the supply chain with changing demand, closing several bakeries, and converting others to higher-margin organic production [5][6] - Investments in innovation are expected to exert further pressure on margins in the near term [5] Market Performance - FLO's shares have declined by 49.9% over the past year, compared to a 19.4% decline in the industry and a 1.6% dip in the Zacks Consumer Staples sector [7] - The company currently trades at a forward 12-month P/E ratio of 9.96, below the industry average of 14.11 and the sector average of 16.02, indicating a discount relative to peers [10]

Core Insights - ClearBridge Investments reported that mid-cap stocks experienced growth in Q3 2025, driven by a favorable monetary policy environment and stabilizing earnings [1] - The Russell Midcap Value Index outperformed the Russell Midcap Growth Index, returning 6.2% compared to 2.8% [1] - The strategy outperformed its benchmark due to strong stock selection in the consumer staples and healthcare sectors [1] Company Highlights - Performance Food Group Company (NYSE:PFGC) is a key player in the food distribution sector, operating through Foodservice, Convenience, and Specialty segments [2] - The stock of Performance Food Group Company saw a one-month return of -4.03% but gained 12.62% over the last 52 weeks, closing at $96.57 with a market capitalization of $15.143 billion on November 12, 2025 [2] - The company was highlighted as a standout in the consumer staples sector, benefiting from activist engagement and a strategic combination exploration with US Foods [3] Financial Performance - Performance Food Group Company's revenue increased by 10.8% year-over-year in the first quarter of fiscal 2026 [4] - The number of hedge funds holding Performance Food Group Company increased from 44 to 47 in the second quarter [4]