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UN

UNITED NATURAL FOODS INC (UNFI)·Q4 2025 Earnings Summary

Executive Summary

  • Q4 2025 delivered net sales of $7.70B, modestly above consensus, with adjusted EPS of $(0.11) beating Street expectations; GAAP EPS was $(1.43) driven by restructuring, impairments, and cyber incident costs . Revenue beat: $7.70B vs $7.64B consensus; adjusted EPS beat: $(0.11) vs $(0.18) consensus (Values retrieved from S&P Global)*.
  • Gross margin held at 13.4% reported, flat ex-LIFO and cyber costs (13.5% both years), while operating expenses deleveraged to 13.6% due to lost sales from the cyber incident and service investments .
  • Free cash flow improved to $86M in Q4 (FY25 $239M) with net debt down to $1.83B and leverage at 3.3x; liquidity ~$1.50B .
  • FY26 outlook guides net sales of $31.6–$32.0B, adjusted EBITDA of $630–$700M, adjusted EPS $1.50–$2.30, capex+cloud ~$250M, and ~$300M free cash flow; management raised multi-year objectives (sales growth low-single digits and FY27 adjusted EBITDA >$730M), targeting leverage ~2.5x by FY26 and <2x by FY27 .

What Went Well and What Went Wrong

  • What Went Well

    • “UNFI delivered a solid fourth quarter as we effectively navigated the cyber incident... delivered above-industry sales growth, while improving our effectiveness and efficiency. This drove higher free cash flow and further strengthened our financial position.” — CEO Sandy Douglas .
    • Natural segment growth +9.1% on comparable 13-week basis; volume and mix supported revenue resilience despite cyber headwinds .
    • Free cash flow inflected sharply: Q4 $86M; FY25 $239M vs $(92)M in FY24, with net leverage down to 3.3x and lowest net debt since 2018 .

  • What Went Wrong

    • Cybersecurity incident drove ~5% sales impact and ~$50M adjusted EBITDA impact in Q4; elevated shrink and manual processes lifted OpEx rate to 13.6% .
    • GAAP loss widened (EPS $(1.43)) on restructuring ($59M), asset impairments, and other charges; adjusted EBITDA fell to $116M from $143M YoY on reported basis .
    • Conventional segment declined (reported −12.8% YoY in Q4) and retail was down, reflecting customer/program optimization and divestment/closure dynamics .

Financial Results

Quarterly trend vs estimates (oldest → newest):

MetricQ2 2025Q3 2025Q4 2025Q4 2025 Consensus
Net Sales ($USD Billions)$8.16 $8.06 $7.70 $7.64*
GAAP Diluted EPS ($)$(0.05) $(0.12) $(1.43) —
Adjusted EPS ($)$0.22 $0.44 $(0.11) $(0.18)*
Gross Margin (%)13.1% 13.4% 13.4% —
OpEx as % of Sales12.6% 12.7% 13.6% —
Adjusted EBITDA ($USD Millions)$145 $157 $116 —

YoY comparison for the quarter:

MetricQ4 2024Q4 2025
Net Sales ($USD Billions)$8.16 $7.70
GAAP Diluted EPS ($)$(0.63) $(1.43)
Adjusted EPS ($)$0.01 $(0.11)
Gross Margin (%)13.7% 13.4%
OpEx as % of Sales13.2% 13.6%
Adjusted EBITDA ($USD Millions)$143 $116

Segment breakdown (reported):

Segment Net Sales ($USD Millions)Q4 2024Q4 2025
Natural$3,943 $3,998
Conventional$3,917 $3,414
Retail$628 $573
Eliminations$(333) $(289)

KPIs and Capital Structure:

KPIQ3 2025Q4 2025
Free Cash Flow ($USD Millions)$119 $86
Net Debt ($USD Billions)~$1.93 ~$1.83
Net Debt/Adj. EBITDA (x)3.3x 3.3x
Liquidity ($USD Billions)~$1.49 ~$1.50

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales ($B)FY26—$31.6–$32.0 New
Net Income ($M)FY26—$0–$50 New
EPS ($)FY26—$0.00–$0.80 New
Adjusted EPS ($)FY26—$1.50–$2.30 New
Adjusted EBITDA ($M)FY26—$630–$700 New
Capex + Cloud ($M)FY26—~ $250 New
Free Cash Flow ($M)FY26—~ $300 New
Adjusted Effective Tax RateFY26—25% (for adjusted EPS) New
Multi-Year Net SalesFY24–FY27~Flat vs FY24 (prior) Low-single-digit CAGR Raised
FY27 Adjusted EBITDAFY27Lower prior target >$730M Raised
Net Leverage TargetFY26/FY27~3.2x/≤2.5x later (prior) ~2.5x by FY26; <2x by FY27 Pulled forward

Earnings Call Themes & Trends

TopicQ2 2025 (Mar)Q3 2025 (Jun)Q4 2025 (Sep)Trend
Lean/Operational Efficiency9 DCs on Lean; mid-single-digit productivity; shrink near 10-quarter low 20 DCs; throughput +5%; continued OpEx leverage 28 DCs; Lean embedded; OpEx rate expected to revert post-cyber Expanding adoption, sustained efficiency gains
Supply Chain/Network OptimizationFort Wayne DC closure; asset sales underway Exit unprofitable Key Food; Allentown closure; ~$53M termination fee Capacity added (Manchester, Sarasota; +400k sqft); automation investment Rationalize while investing in growth DCs
Digital/Services (UMN, ESL, payments)Building services for underserved customers; media/digital focus Partnering across macro backdrops; pipeline strong Biggest opportunity in digital services; supplier navigation and retail media Growing strategic emphasis
Tariffs/MacroMonitoring; agile supply alternatives Moderate impacts expected; task force managing Dynamic backdrop; focus on price competitiveness Managed, limited near-term impact
Segment Mix/Natural GrowthNatural +8% sales; conventional +2% Natural +12%; conventional +2.7% Natural +9.1% (comparable); conventional −6.1% (comparable) Natural outperforms; conventional optimized
Cyber Incident—Incident disclosed; limited operations; transparency emphasized Costs quantified; ~$50M EBITDA impact; remediation outlined One-off, learned resiliency

Management Commentary

  • “We aspire to become the food industry's most valued partner by bringing innovative products, programs, and services… We’re increasingly confident in our trajectory and in our ability to create sustainable long-term value.” — CEO Sandy Douglas .
  • “Our gross margin rate… excluding LIFO and the cyber incident… was 13.5% in Q4 of both years… highest quarterly rate this fiscal year.” — CFO Matteo Tarditi .
  • “All in, we estimate that the cyber incident impacted adjusted EBITDA by approximately $50 million in the quarter… full-year adjusted EBITDA would have been roughly $600 million.” — CFO Matteo Tarditi .
  • “We now expect net sales to grow in the low single digits… and adjusted EBITDA… in the low double-digit range… adjusted EBITDA of over $730 million in fiscal 2027.” — CEO Sandy Douglas .

Q&A Highlights

  • Natural merchandising and profitability: Management sees three-pronged opportunity across customer segments to sustain high-single-digit natural growth, with conventional profitability improved via mix, efficiency, and Lean embedding; margin expansion roadmap laid out through 2027 .
  • Amazon/enterprise accounts: UNFI avoids specific customer commentary but emphasizes tailored, segmented enterprise value creation and support for independents; capital and Lean can expand capacity without outsized capex .
  • Automation ROI: Six automated DCs by end of 2026 are ROI-positive, enhancing capacity, effectiveness, and safety within ~$250M FY26 capex envelope .
  • EPS guidance bridge: Differences between reported and adjusted driven by non-repeat items (cyber remediation, termination fees); ongoing restructuring/transformation costs expected in reported EPS .
  • Sales cadence and promotion: FY26 midpoint implies flat vs FY25 with natural-led organic growth offset by network optimization; promo cadence edging up but disciplined, with digital coupons/media lifting share .

Estimates Context

  • Q4 2025 revenue: $7.70B vs consensus $7.64B — modest beat; drivers were inflation (~2%), positive mix, and underlying demand, partially offset by cyber-related volume decline (~3%) (Values retrieved from S&P Global)*.
  • Q4 2025 adjusted EPS: $(0.11) vs consensus $(0.18) — beat, aided by gross margin stability ex-LIFO/cyber and controlled shrink offsetting OpEx deleverage and interest; GAAP EPS $(1.43) impacted by restructuring and impairment (Values retrieved from S&P Global)*.
  • Post-quarter: FY26 guide implies ~20% YoY adjusted EBITDA growth at midpoint; Street likely to raise EBITDA/FCF estimates given higher multi-year targets and leverage reduction plan .

Key Takeaways for Investors

  • Q4 print showed resilience: revenue beat and adjusted EPS beat despite a significant cyber headwind; gross margin normalized ex one-offs while OpEx deleveraging is transient — constructive for near-term sentiment .
  • Free cash flow has inflected and is central to the deleveraging story; FY26 FCF guide of ~$300M and 2.5x leverage target by year-end are catalysts for re-rating .
  • Natural growth remains the engine; conventional is being actively optimized (exit unprofitable contracts, DC closures) — expect margin mix to improve as optimization completes .
  • Multi-year algorithm raised: low-single-digit sales growth and low double-digit adjusted EBITDA growth to FY27 (~$730M+) support medium-term upside; automation and Lean underpin execution .
  • Watch near-term operating expense normalization as cyber effects roll off and Lean throughput gains continue; management expects OpEx rate to revert to pre-incident trends .
  • Risks: cyber-related residual costs, tariff dynamics, and conventional segment pressures; mitigants include diversified customer base, agile supply, and enhanced services (digital/media) .
  • Trading stance: positive on FCF/EBITDA momentum and raised long-term targets; look for execution updates at Investor Day and early FY26 quarters to validate margin expansion and leverage trajectory .

Notes: Consensus values marked with an asterisk are from S&P Global and may reflect adjusted EPS vs GAAP.