United Natural Foods 2026 Q1 Earnings Narrowed Losses by 82.9% and 24.6% Adjusted EBITDA Growth

United Natural Foods (UNFI) reported Q1 2026 earnings on Dec 2, 2025, with non-GAAP EPS of $0.56, beating estimates by $0.16, and reaffirmed its full-year guidance despite a 0.4% revenue decline.

Revenue

Total revenue fell 0.4% to $7.84 billion in Q1 2026, driven by a 12% drop in conventional revenue due to the Allentown distribution center exit and retail store closures. Natural/organic product demand surged 11% to $4.24 billion, partially offsetting the decline. Retail division sales fell 5.5% to $554 million.

Earnings/Net Income

UNFI narrowed its net loss to $4 million (from $20 million in Q1 2025) and reduced per-share losses by 82.9% to $0.06. Adjusted EPS rose to $0.56, up 250% year-over-year, reflecting improved operational efficiency. The company’s adjusted EBITDA jumped 24.6% to $167 million.

Post-Earnings Price Action Review

A strategy of buying UNFI when revenues miss and holding for 30 days yielded a 29.62% return, underperforming the 85.80% benchmark. With a Sharpe ratio of 0.10 and 0.00% maximum drawdown, the strategy showed modest risk-adjusted returns but limited downside risk.

CEO Commentary

CEO James Alexander Douglas highlighted "meaningfully above prior year levels" in adjusted EBITDA and free cash flow, alongside a 1-turn net leverage decline. Strategic priorities include AI-driven Relex technology, network optimization (e.g., Allentown exit), and lean management to boost efficiency. The company aims to become the industry’s "most valued partner" by enhancing merchandising, private brands, and supplier collaboration.

Guidance

UNFI reaffirmed 2026 guidance: $31.6–32 billion in sales (pressured by Allentown transition), adjusted EBITDA of $630–700 million (20% YOY growth), and free cash flow of ~$300 million. The company targets net leverage below 2.5x by year-end, driven by improved cash flow and operational efficiencies.

Additional News

1. Network Optimization:

   UNFI accelerated its exit from the Allentown, PA distribution center and closed several retail stores to streamline operations.

2. Technology Investments:

   The company deployed AI-driven Relex technology to enhance supply chain efficiency and customer service.

3. Strategic Focus:

   CEO Douglas emphasized lean management and supplier collaboration to differentiate the company in a competitive market.

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