UNFI Shares Plummet on Missed Revenue Targets

United Natural Foods Inc. (UNFI) experienced a significant drop in its stock price, falling over 11% in premarket trading on Tuesday. This decline followed the company's announcement of missed quarterly revenue estimates and full-year guidance that fell below Wall Street expectations, despite earnings per share aligning with forecasts.

For the 13 weeks ending May 2, UNFI reported a 4.2% decrease in revenue, reaching $7.72 billion, which was below the consensus estimate of $7.80 billion. The company's updated fiscal 2026 guidance also presented challenges, with projected EPS of $2.40 to $2.60 trailing the $2.58 consensus and revenue guidance of $31.10 billion to $31.30 billion falling short of the $31.31 billion estimate.

The overall sales decline was primarily attributed to a 13.6% decrease in Conventional segment sales to $3.14 billion and a 10.1% fall in Retail sales to $515 million. These were partially counteracted by a 4.4% growth in the Natural segment, which generated $4.34 billion. Approximately 450 basis points of the sales reduction stemmed from strategic network optimization, including the closure of a distribution center in Allentown, Pennsylvania.

Despite revenue challenges, the company saw improvements in profitability metrics. Gross profit margin widened to 13.6% from 13.4% year-over-year, and operating expenses decreased due to insurance proceeds and cost-saving initiatives. Adjusted EBITDA rose 16.6% to $183 million, and the company reported a net income of $33 million, a significant turnaround from a net loss of $7 million in the prior year.

However, free cash flow dropped by 54.6% to $54 million, mainly due to lower net cash from operating activities. UNFI maintained its full-year free cash flow target of approximately $330 million. Net debt decreased to $1.63 billion, improving the net leverage ratio to 2.5x. During the quarter, the company repurchased 82,233 shares.