United Natural Foods Inc. has reported financial results for the third quarter of fiscal 2026 (13 weeks) ended May 2, including net sales of $7.7 billion, net income of $33 million, adjusted EBITDA of $183 million, and adjusted earnings per share of $0.77. The company also narrowed its full-year outlook, now projecting net sales of $31.1-$31.3 billion, adjusted EBITDA of $685-$705 million and free cash flow of approximately $330 million.
Third Quarter Highlights
- Net sales decreased 4.2 percent to $7.7 billion, includes impact of approximately 450 basis points from optimization actions;
- Net income of $33 million; earnings per diluted share (EPS) of $0.52;
- Adjusted EBITDA increased 16.6 percent to $183 million;
- Adjusted EPS increased to $0.77; and
- Net cash provided by operating activities of $98 million; free cash flow of $54 million.
CEO: Disciplined Execution Driving Profitability
“Through disciplined execution of our value creation strategy, we delivered underlying sales growth, higher profitability and strong free cash flow, which strengthened our balance sheet and increased our financial flexibility,” said Sandy Douglas, UNFI’s CEO.
“Our team remains focused on delivering a strong close to fiscal 2026 and creating long-term, shared value for our stakeholders.”
Sales and Margin Performance
Net sales decreased 4.2 percent in the third quarter compared to the prior year, including an approximate 450 basis point impact from accretive optimization actions. This was largely driven by an expected decrease in conventional sales primarily due to the transition out of the Allentown, Pennsylvania distribution center completed in the first quarter of fiscal 2026.
Gross profit was $1,049 million, a decrease of 3.0 percent compared to the third quarter of fiscal 2025. The gross profit rate was 13.6 percent of net sales compared to 13.4 percent in the prior year, benefiting from network optimization actions and customer mix.
Operating Expenses and Productivity
Operating expenses decreased to $954 million, or 12.4 percent of net sales, compared to $1,025 million, or 12.7 percent of net sales, in the prior year. The decrease as a percentage of net sales was driven primarily by insurance proceeds and benefits from cost-saving initiatives, including network optimization actions and higher distribution center productivity.
Interest and Taxes
Interest expense, net for the third quarter was $31 million compared to $36 million in the prior year, driven by lower average outstanding debt balances. The effective tax rate was an expense rate of 21.4 percent on pre-tax income compared to a benefit rate of 56.3 percent on pre-tax loss in the prior year.
Net Income and Adjusted EBITDA
Net income for the third quarter was $33 million, compared to a net loss of $7 million in the prior year. Adjusted EBITDA increased 16.6 percent to $183 million from $157 million. Adjusted earnings per share were $0.77 compared to $0.44 in the third quarter of fiscal 2025.
Balance Sheet and Leverage
Total outstanding debt, net of cash, was $1.63 billion at quarter end, a decrease of $46 million compared to the end of the second quarter and a decrease of $296 million year-over-year. The net leverage ratio improved to 2.5x, the lowest since fiscal 2018.
Total liquidity was approximately $1.25 billion, consisting of $43 million in cash plus approximately $1.20 billion in unused capacity under the company’s asset-based lending facility, which was amended during the quarter with maturity extended to April 2031.
Share Repurchases
During the third quarter, the company repurchased 82,233 shares at an average price of $48.64 for an aggregate cost of approximately $4 million. For fiscal 2026 through the end of May, UNFI has repurchased approximately 990,000 shares for approximately $38 million.
Fiscal 2026 Outlook
The company is reiterating its full-year outlook midpoints and narrowing applicable ranges:
- Net sales: $31.1-$31.3 billion;
- Net income: $55-$70 million;
- EPS: $0.90-$1.10;
- Adjusted EPS: $2.40-$2.60;
- Adjusted EBITDA: $685-$705 million; and
- Free cash flow: ~$330 million
About UNFI
Providence, Rhode Island-based UNFI, a grocery wholesaler, delivers fresh, branded and owned brand products to more than 30,000 locations throughout North America, including natural product superstores, independent retailers, conventional supermarket chains, e-commerce providers and foodservice customers.
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