United Natural Foods 2025 Q3 Earnings Narrowed Losses as Net Income Improves 65%

United Natural Foods (UNFI) reported its fiscal 2025 Q3 earnings on June 10th, 2025. The company achieved a notable 7.5% increase in total revenue, reaching $8.06 billion compared to $7.50 billion in the previous year's Q3. Despite facing challenges, including a recent cyberattack, UNFI managed to narrow its net loss from $20 million to $7 million, showcasing a significant 65% improvement. The company's guidance remains optimistic, expecting over a 50% increase in free cash flow for fiscal 2025, although disruptions from the cyber incident may pose challenges.

Revenue

United Natural Foods saw its total revenue rise by 7.5% to $8.06 billion in Q3 2025, compared to $7.50 billion in Q3 2024. The wholesale segment contributed significantly with $7.78 billion, the retail segment added $573 million, while the 'Other' segment generated $56 million. These gains were partially offset by eliminations amounting to $346 million.

Earnings/Net Income

United Natural Foods reduced its loss per share to $0.12 in Q3 2025, marking a 64.7% improvement from a $0.34 loss per share in Q3 2024. The company achieved a net loss reduction of 65%, reporting a $7 million loss compared to $20 million in the previous year. Despite the improvements, EPS remains in the negative, indicating ongoing challenges.

Price Action

The stock price of United Natural Foods experienced a significant decline, dropping 7.21% during the latest trading day, falling 19.10% over the past week, and down 14.50% month-to-date.

Post-Earnings Price Action Review

The strategy of purchasing UNFI shares following a revenue beat and holding for 30 days yielded a 35.24% return. However, this performance lagged significantly behind the benchmark, resulting in a substantial excess loss of 64.57%. The Sharpe ratio stood at a low 0.11, reflecting poor risk-adjusted returns and high volatility. Additionally, the investment strategy faced a maximum drawdown of 85.72%, indicating a considerable peak-to-trough decline. These results highlight the strategy's underperformance in the face of market volatility and risk, suggesting that reliance on revenue beats alone may not be sufficient for generating favorable returns.

CEO Commentary

James Alexander Miller Douglas, CEO & Director, emphasized the robust performance in Q3 2025, highlighted by a 7.5% sales increase driven by a 12% growth in the Wholesale Natural Products sector. Despite challenges, including a dynamic macroeconomic environment and a recent IT security incident, Douglas remains optimistic about the company's potential for long-term value creation, expressing confidence in their incident management.

Guidance

United Natural Foods projects over a 50% increase in free cash flow for fiscal 2025 and aims to achieve nearly 2.5 turns net leverage by fiscal 2026's end. The company maintains its outlook for net sales, adjusted EBITDA, and capital investments, with GAAP net income estimated at a $7 million loss and an EPS of -$0.12. A $53 million contract termination fee related to the Key Foods agreement will be recorded in restructuring costs.

Additional News

United Natural Foods recently faced a cyberattack, which has caused disruptions across its supply chain, affecting its ability to fulfill and distribute orders to customers such as Whole Foods. This incident is part of a wider trend of cyberattacks on the retail and grocery supply chain. UNFI has implemented workarounds to continue servicing its customers and is working to restore its IT systems. The company has reported the incident to law enforcement and is collaborating with clients to minimize disruptions. Despite these challenges, UNFI remains focused on restoring its capabilities and supporting its customers.