UNFI Swings to Q4 Profit and Guides to Higher Fiscal 2027 Earnings

United Natural Foods returned to a fourth-quarter profit in fiscal 2026 and set a fiscal 2027 outlook that calls for higher earnings, even as quarterly sales remained slightly below the prior-year level. The grocery wholesaler reported net income of $35 million, or $0.57 per diluted share, for the 13 weeks ended August 1, compared with a net loss of $87 million, or $1.43 per share, a year earlier.

Adjusted earnings also improved sharply. Fourth-quarter adjusted EPS rose to $0.69 from an adjusted loss of $0.11 per share, while adjusted EBITDA increased 48.3% to $172 million from $116 million. Net sales slipped 0.7% to $7.64 billion.

UNFI’s September 8 earnings release also showed a profitable full fiscal year after a loss in fiscal 2025. Net income for fiscal 2026 reached $84 million, or $1.34 per diluted share, versus a $118 million net loss, or $1.95 per share, in the previous year. Adjusted EBITDA rose 27.0% to $701 million, and adjusted EPS increased to $2.65 from $0.71.

The comparison with last year’s fourth quarter is unusually wide because fiscal 2025 included costs associated with a cybersecurity incident. UNFI said the latest quarter benefited from cost-saving initiatives and higher distribution-center productivity, while planned network optimization and the unwind of short-term project work continued to weigh on sales.

Margins improve even as quarterly sales slip

Gross profit rose 1.9% to $1.05 billion despite the small decline in sales. Gross profit as a percentage of net sales increased to 13.7% from 13.4%, with UNFI attributing the improvement to network optimization actions and customer mix, partly offset by a lower gross margin rate in its Retail segment.

Operating expenses fell to $984 million from $1.05 billion and declined to 12.9% of sales from 13.6%. Management said cost-saving measures and higher distribution-center productivity contributed to the lower expense rate. The year-earlier period also carried spending to service customers during the cybersecurity disruption, making the latest comparison favorable.

Sales trends differed considerably across the business. Natural-product sales increased 6.6% in the quarter to $4.26 billion, while Conventional sales declined 8.6% to $3.12 billion. Retail sales fell 7.9% to $528 million. UNFI said overall quarterly sales included an adverse effect of about 500 basis points from planned optimization actions and about 150 basis points from the completed unwind of short-term project work.

Interest expense provided another tailwind to reported earnings, falling to $29 million from $36 million as average outstanding debt balances declined. Operating income was $69 million, compared with an operating loss of $78 million in the year-earlier quarter. On an adjusted basis, the stronger fourth-quarter result capped a fiscal year in which adjusted EBITDA grew by $149 million despite a 2.0% decline in annual net sales to $31.15 billion.

Fiscal 2027 outlook points to another earnings step-up

For the 52-week fiscal year ending July 31, 2027, UNFI expects net income of $105 million to $145 million and diluted EPS of $1.70 to $2.30. Both ranges sit above fiscal 2026 results of $84 million and $1.34 per share. Adjusted EPS is projected at $3.00 to $3.50, compared with $2.65 in fiscal 2026, while adjusted EBITDA is forecast at $730 million to $780 million versus $701 million.

The sales outlook is more restrained. UNFI expects fiscal 2027 net sales of $31.2 billion to $31.8 billion, compared with $31.15 billion in fiscal 2026. The distributor said it has begun onboarding additional business from new and existing customers and expects that work to contribute to revenue growth after it cycles larger optimization actions that reduced reported sales in fiscal 2026.

Management also said the midpoint of its fiscal 2027 adjusted EBITDA guidance is $25 million above the guidance presented at the company’s December 2025 investor day. At that event, UNFI outlined a longer-term goal of roughly $800 million of adjusted EBITDA in fiscal 2028 and about $300 million of annual free cash flow from fiscal 2026 through fiscal 2028.

The outlook does not call for every financial measure to increase. Fiscal 2027 free cash flow is expected at $275 million to $325 million, compared with $323 million in fiscal 2026, and capital plus cloud-implementation expenditures are projected at about $300 million. UNFI said its forward estimates depend on assumptions and factors outside management’s control, and it cannot fully reconcile some forward-looking non-GAAP measures because certain adjustment items cannot be predicted without unreasonable effort.

Cash generation and lower leverage support the investment plan

Full-year operating cash flow increased to $540 million from $470 million, while free cash flow rose 35.1% to $323 million from $239 million. In the fourth quarter, operating cash flow was $197 million and free cash flow was $80 million. Capital spending rose to $117 million in the quarter from $74 million as UNFI invested more in supply chain and technology.

Debt reduction continued through year-end. Net debt was $1.54 billion at August 1, down $295 million during fiscal 2026, and UNFI’s net leverage ratio was 2.2 times. Total liquidity stood at about $1.27 billion, consisting of $37 million of cash and roughly $1.23 billion of unused capacity under its asset-based lending facility.

The company’s Form 8-K filed with the Securities and Exchange Commission confirms that the September 8 earnings release was furnished as Exhibit 99.1. The filing also records a new $200 million share-repurchase authorization approved by UNFI’s board on September 3, replacing the program authorized in 2022. During the fiscal fourth quarter, UNFI repurchased about $21 million of shares at an average price of $49.94.

Operationally, UNFI said it completed the initial deployment of Lean daily management across 44 distribution centers and recorded a fourth consecutive quarter of year-over-year improvement in fill rates, on-time deliveries and throughput. Those supply-chain measures, together with planned technology spending and newly onboarded customer business, form the operating backdrop for management’s fiscal 2027 earnings targets.