United Natural Foods' Q3 Revenue Drops 4.2%; EPS Matches, Guidance Misses
UNFI•United Natural Foods' Q3 revenue fell 4.2% year over year to $7.72 billion, missing the $7.80 billion estimate, while adjusted EPS matched forecasts at $0.77. Full-year guidance of $2.40-$2.60 EPS and $31.10-$31.30 billion revenue trailed expectations, despite 16.6% EBITDA growth to $183 million and net debt reduction to $1.63 billion.
1. Q3 Performance Overview
United Natural Foods reported Q3 revenue of $7.72 billion, down 4.2% year over year, and adjusted EPS of $0.77, in line with expectations. Net income was $33 million, or $0.52 per share, compared with a $7 million loss a year earlier.
2. Segment Breakdown
Conventional segment sales fell 13.6% to $3.14 billion and Retail declined 10.1% to $515 million, while the Natural and Organic Foods segment grew 4.4% to $4.34 billion. The exit of the Allentown, Pennsylvania distribution center accounted for approximately 450 basis points of the overall sales decline.
3. Guidance and Market Reaction
The company set full-year EPS guidance of $2.40 to $2.60 and revenue guidance of $31.10 to $31.30 billion, both below consensus forecasts of $2.58 EPS and $31.31 billion revenue. This shortfall drove share prices down over 11% in premarket trading.
4. Financial Position and Cash Flow
Gross profit margin widened to 13.6% of net sales from 13.4%, and operating expenses fell to 12.4% of net sales from 12.7%, driven by cost-saving initiatives. Adjusted EBITDA rose 16.6% to $183 million; free cash flow dropped 54.6% to $54 million; net debt fell to $1.63 billion, lowering leverage to 2.5x; and the company repurchased 82,233 shares at an average of $48.64.
