United Natural Foods Inc. (NYSE:UNFI) stock rose Tuesday after the grocery wholesaler reported fourth-quarter fiscal 2026 results that beat Wall Street earnings expectations, with revenue roughly in line with estimates, and issued its fiscal 2027 outlook.
Earnings Snapshot
Fourth-quarter sales fell 0.7% year over year to $7.642 billion, compared with the $7.677 billion estimate.
Network optimization reduced reported sales growth by about 500 basis points. The unwind of short-term project work had another 150-basis-point impact.
Underlying sales grew at a low-single-digit rate, broadly in line with market growth.
Gross margin increased about 30 basis points year over year to 13.7%. The improvement reflected network optimization benefits and customer mix.
The company’s adjusted EBITDA jumped 48.3% to $172 million. Adjusted EBITDA margin reached about 2.3%, marking another quarter of margin expansion.
Adjusted earnings of 69 cents per share beat the consensus estimate of 61 cents.
Fourth-quarter free cash flow totaled $80 million. Full-year free cash flow reached a company record of $323 million.
UNFI repurchased about 420,000 shares for $21 million during the quarter. Its board also authorized a new $200 million share repurchase program, replacing the authorization set to expire in September.
Natural Products Outperform
Underlying sales in UNFI’s natural products business outpaced the broader market. Demand remained strong for natural, organic, fresh and specialty products.
Meanwhile, conventional product sales declined at a mid-single-digit rate.
Retail sales fell 8% as UNFI carried out planned footprint optimization measures. Cub same-store sales improved about 150 basis points sequentially from the third quarter after adjusting for the prior-year cyber impact.
Fiscal 2027 Outlook
For fiscal 2027, UNFI expects adjusted earnings of $3.00 to $3.50 per share, compared with the $3.22 estimate.
The company forecast sales of $31.2 billion to $31.8 billion, compared with the $31.858 billion estimate.
During the earnings call, United Natural Foods said its fiscal 2027 outlook assumes low-single-digit inflation. However, the company does not expect price increases to drive margin expansion.
Instead, management said productivity and operational improvements will support margins as it works with suppliers to keep prices “low, stable and predictable.”
Adjusted EBITDA is expected to range from $730 million to $780 million. The midpoint represents high-single-digit growth and stands $25 million above the target outlined at UNFI’s Investor Day.
The company expects sales to decline in the first quarter as network optimization continues to weigh on results. However, UNFI expects profitable growth to return in the second half as its initiatives gain momentum.
The midpoint of the sales and adjusted EBITDA forecasts implies about 10 basis points of year-over-year margin expansion. That would allow UNFI to reach its fiscal 2028 margin-rate target one year ahead of schedule.
For fiscal 2028, UNFI expects adjusted EBITDA to increase about 10% from the midpoint of its fiscal 2027 guidance, implying further margin expansion.
UNFI Price Action: United Natural Foods shares were up 4.03% at $45.70 at the time of publication on Tuesday, according to Benzinga Pro data.
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