United Natural Q2 Earnings Beat Estimates, Sales Guidance Lowered

United Natural Foods, Inc. UNFI reported second-quarter fiscal 2026 results, wherein the bottom line improved year over year and beat the Zacks Consensus Estimate. The top line declined year over year and missed the consensus mark. Management also updated its fiscal 2026 guidance.

United Natural posted adjusted earnings of 62 cents per share for the quarter under review, beating the Zacks Consensus Estimate of 51 cents. Also, the bottom line increased from 22 cents reported in the year-earlier quarter.

United Natural Foods, Inc. Price, Consensus and EPS Surprise

United Natural Foods, Inc. price-consensus-eps-surprise-chart | United Natural Foods, Inc. Quote

Net sales decreased 2.6% year over year to $7,947 million, missing the Zacks Consensus Estimate of $8,151 million. This decline includes an approximately 500 basis point (bps) impact from accretive optimization initiatives in the quarter. The decrease reflects an anticipated decline in conventional sales, primarily due to the transition out of the Allentown, PA, distribution center in the first quarter of fiscal 2026.

UNFI’s Quarterly Performance by Division

The Natural segment experienced year-over-year sales growth of 6.7%. The Conventional and Retail segments witnessed a year-over-year sales decline of 12.1% and 8.2%, respectively.

Analysis of UNFI’s Costs & Margins

UNFI’s gross profit fell 2.4% year over year to $1,046 million. The gross profit margin of 13.2% expanded 10 bps from 13.1% reported in the year-ago quarter. This expansion was driven by benefits from network optimization and a favorable customer mix, as well as higher procurement gains, partially offset by a lower gross margin rate in the Retail segment.

Operating expenses were $972 million compared with $1,031 million in the year-ago quarter. As a percentage of sales, operating expenses were 12.2% compared with 12.6% in the year-ago period. The reduction in operating expenses as a percentage of net sales reflects the benefits of cost-saving initiatives, including network optimization and improved distribution center productivity.

Adjusted EBITDA came in at $179 million, up 23.4% from $145 million in the year-ago quarter.

UNFI’s Financial Health Snapshot

The company had a total liquidity of $1.34 billion as of Jan. 31, 2026, including cash of nearly $52 million and $1.29 billion of available capacity under its asset-based lending facility.

In the second quarter of fiscal 2026, free cash flow was $243 million compared with $193 million in the prior-year quarter. The reported figure reflects $283 million in net cash provided by operating activities and $40 million in capital expenditure.

Total outstanding debt, net of cash, was $1.68 billion at the end of the second quarter of fiscal 2026. The net leverage ratio was 2.7x as of Jan. 31, 2026.

United Natural’s Guidance for FY26

UNFI updated its fiscal 2026 outlook. For the full year, the company now expects net sales between $31 billion and $31.4 billion compared with its prior forecast of $31.6 billion and $32 billion.

Adjusted EPS is now projected to be $2.30-$2.70, higher than the earlier guidance of $1.50 to $2.30. Adjusted EBITDA is now expected to land between $680 million and $710 million compared with its prior forecast of $630 million and $700 million.

The company projects capital and cloud implementation expenditure of around $250 million for fiscal 2026. It anticipates a free cash flow of approximately $330 million for fiscal 2026.

Shares of this Zacks Rank #3 (Hold) company have risen 15.9% in the past three months against the industry’s decline of 1.9%.

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Stocks to Consider

Mama's Creations, Inc. MAMA manufactures and markets fresh deli-prepared foods in the United States. At present, MAMA sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The consensus estimate for Mama's Creations’ current fiscal-year sales and earnings implies growth of 39.9% and 44.4%, respectively, from the year-ago figures. Mama's Creations delivered a trailing four-quarter earnings surprise of 133.3%, on average.

The Hershey Company HSY engages in the manufacture and sale of confectionery products and pantry items in the United States and internationally. It holds a Zacks Rank #2 (Buy) at present. HSY delivered a trailing four-quarter earnings surprise of 17.2%, on average.

The Zacks Consensus Estimate for Hershey’s current financial-year sales and earnings indicates growth of 4.8% and 29.3%, respectively, from the prior-year reported levels.

US Foods Holding Corp. USFD engages in the marketing, sale and distribution of fresh, frozen and dry food and non-food products to foodservice customers in the United States. USFD currently carries a Zacks Rank #2. US Foods Holding delivered a trailing four-quarter earnings surprise of 2.2%, on average.

The Zacks Consensus Estimate for US Foods Holding’s current fiscal-year sales and earnings implies growth of 5.4% and 20.9%, respectively, from the year-ago figures.

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