United Natural Foods, Inc. Announces Q1 Fiscal 2026 Financial Results
United Natural Foods, Inc. (NYSE: UNFI) (the “Company” or “UNFI”) today announced its financial results for the first quarter of fiscal 2026, covering the 13-week period ended November 1, 2025. The results reflect the Company’s ongoing focus on operational efficiency, customer service improvement, and strategic growth initiatives.
First Quarter Fiscal 2026 Highlights (Compared to First Quarter Fiscal 2025)
- Net Sales: $7.8 billion, a slight decrease of 0.4% year-over-year
- Net Loss: $4 million, or $0.06 per diluted share
- Adjusted EBITDA(1): $167 million, up 24.6%
- Adjusted EPS(1): $0.56, reflecting significant improvement from $0.16 in Q1 FY2025
- Net Cash Used in Operating Activities: $38 million
- Free Cash Flow(1): $54 million used
Financial and Operational Developments
During the first quarter of fiscal 2026, UNFI continued to advance its strategic initiatives aimed at driving efficiency and strengthening customer service across its distribution network. The Company has methodically deployed supply chain solutions and lean management practices to enhance operational effectiveness. Lean daily management has now been implemented in 34 distribution centers nationwide, enabling the Company to optimize processes, reduce waste, and improve throughput.
The benefits of these initiatives were evident in the Company’s financial results. Adjusted EBITDA rose by nearly 25% to $167 million, while free cash flow improved by $105 million compared to the same period last year. These results were driven by increased efficiency in distribution operations, cost management programs, and incremental gains from lean daily management implementation.
UNFI’s net leverage ratio declined sequentially to 3.2x, the lowest level since fiscal 2023. Management remains confident in achieving the targeted net leverage ratio of 2.5x or lower by the end of fiscal 2026.
Sandy Douglas, CEO of UNFI, commented, “We started fiscal 2026 with another quarter of solid execution and continued progress in delivering more value to our customers and suppliers. Our network optimization initiatives are ahead of schedule, and the benefits from recent supply chain investments, coupled with process improvements, are enabling us to strengthen service levels and increase throughput. These efforts contributed to nearly 25% growth in Adjusted EBITDA, a significant improvement in free cash flow, and a sequential decline in net leverage.”
Douglas further emphasized, “As we move deeper into fiscal 2026, our priorities remain focused on enhancing service levels, building tailored solutions, and offering expanded capabilities to support the growth strategies of our customers and suppliers.”
Revenue and Profitability
Net sales for the first quarter of fiscal 2026 were $7.8 billion, a modest 0.4% decrease compared to the same quarter in the prior year. This slight decline was primarily due to reductions in conventional sales, which were partially offset by growth in the Company’s natural products segment. The decrease in conventional sales was largely expected and attributed to strategic store closures in the retail sector, as well as the phased transition out of UNFI’s Allentown, Pennsylvania distribution center.
Gross profit for the quarter reached $1.1 billion, representing a $13 million increase, or 1.3%, compared to Q1 FY2025. The gross profit rate improved to 13.4% of net sales from 13.2% a year earlier. This improvement was driven by several factors, including network optimization, favorable customer mix, enhanced supplier programs, and higher procurement gains, all of which supported better margins despite the slight decline in overall sales.
Operating expenses were $996 million, or 12.7% of net sales, compared with $1,015 million, or 12.9% of net sales in the first quarter of fiscal 2025. The decrease in operating expenses as a percentage of sales reflects the benefits of ongoing cost-saving measures, including higher productivity across distribution centers and operational efficiency initiatives.
Interest expense, net, for the first quarter of fiscal 2026 was $34 million, down slightly from $36 million in Q1 FY2025, due to lower average debt balances during the period. The effective tax rate was a benefit of 55.6% on pre-tax loss, up from 16.7% in the first quarter of fiscal 2025, primarily due to discrete tax benefits arising from favorable audit settlements and employee stock award activity during the quarter.
Net Income and Earnings Performance
UNFI reported a net loss of $4 million for the first quarter of fiscal 2026, a significant improvement from a net loss of $21 million in the same period last year. On a per-share basis, net loss per diluted share was $0.06, compared with $0.35 in Q1 FY2025. Adjusted EPS rose to $0.56, up from $0.16 in the prior-year period, reflecting operational improvements and favorable financial impacts from cost control and productivity initiatives.
Adjusted EBITDA for the quarter was $167 million, compared with $134 million in the first quarter of fiscal 2025, representing a 24.6% increase. The improvement in Adjusted EBITDA underscores the Company’s focus on operational efficiency and margin enhancement.
Capital Structure and Cash Flow
During Q1 FY2026, net cash used in operating activities was $38 million, a significant improvement from $110 million in the first quarter of the prior year. Capital expenditures for the period were $16 million, compared with $49 million in Q1 FY2025, resulting in free cash flow used of $54 million, an improvement from $159 million used in the prior-year quarter.
At the end of the first quarter, total outstanding debt net of cash was $1.90 billion, reflecting an increase of $63 million compared to the fourth quarter of fiscal 2025, but a decrease of $331 million compared to Q1 FY2025. This resulted in a net leverage ratio of 3.2x as of November 1, 2025, demonstrating ongoing progress in debt reduction and capital management.
UNFI’s liquidity position remained strong, with total liquidity of approximately $1.33 billion, comprised of $38 million in cash and $1.29 billion of available capacity under the Company’s asset-based lending facility. This financial flexibility supports UNFI’s ability to invest in strategic growth initiatives, optimize the supply chain, and continue delivering value to customers and shareholders.
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