United Natural Foods Inc (NYSE:UNFI) Reports Mixed Q4 Results with Earnings Beat and Positive Guidance

United Natural Foods Inc (NYSE:UNFI) has reported financial results for its fourth quarter and full fiscal year 2025, delivering a mixed performance that saw sales modestly exceed expectations while profitability metrics showed significant pressure. The company's results and forward-looking guidance have prompted a measured response from investors, with the stock showing modest gains following the announcement.

Earnings and Revenue Performance Versus Estimates

The wholesale distributor posted fourth-quarter net sales of $7.70 billion, coming in slightly below the analyst consensus estimate of $7.79 billion. When adjusted for the extra week in the prior-year period, sales increased 1.6% on a comparable 13-week basis.

On the profitability front, the company reported an adjusted loss per share of $(0.11), which notably beat analyst expectations of a $(0.19) loss. This performance represents a significant decline from the adjusted EPS of $0.01 reported in the same quarter last year, but the smaller-than-expected loss appears to have been viewed positively by the market.

Key quarterly financial highlights include:

• Net sales: $7.70 billion (vs. $7.79 billion estimate)
• Adjusted EPS: $(0.11) (vs. $(0.19) estimate)
• Adjusted EBITDA: $116 million
• Net loss: $87 million
• Free cash flow: $86 million

Market Reaction and Price Action

Following the earnings release, UNFI shares have demonstrated positive momentum, with the stock posting gains across multiple timeframes:

• Current performance: +9.98%
• Last week performance: +0.10%
• Last two weeks performance: +13.43%
• Last month performance: +12.31%

The market's positive response suggests investors are focusing on the earnings beat and the company's improved financial positioning rather than the top-line miss. The substantial outperformance on the bottom line compared to estimates appears to be the primary driver behind the stock's upward movement.

Forward Guidance and Analyst Expectations

Looking ahead, United Natural Foods provided fiscal 2026 guidance that indicates management's confidence in the company's recovery trajectory. The outlook calls for:

• Net sales: $31.6 - $32.0 billion
• Adjusted EPS: $1.50 - $2.30
• Adjusted EBITDA: $630 - $700 million
• Free cash flow: approximately $300 million

This guidance compares favorably to analyst estimates for fiscal 2026, which projected sales of $32.76 billion and revenue growth of approximately 145.97%. The midpoint of the company's adjusted EPS guidance range of $1.90 significantly exceeds current expectations, suggesting management anticipates a substantial recovery in profitability.

Operational and Financial Highlights

Beyond the headline numbers, several operational achievements stood out in the quarterly report. The company demonstrated strong cash flow generation, with free cash flow improving by $331 million compared to the prior year. This enabled meaningful debt reduction, with net debt reaching its lowest level since 2018 at $1.83 billion and the net leverage ratio declining to 3.3x from 4.0x at the end of the prior fiscal year.

CEO Sandy Douglas highlighted the company's resilience in navigating a cyber incident during the quarter while continuing to enhance UNFI's value proposition. "We delivered above-industry sales growth, while improving our effectiveness and efficiency," Douglas stated. "This drove higher free cash flow and further strengthened our financial position."

The company also made progress on its operational initiatives, deploying lean daily management in 28 distribution centers during fiscal 2025, which management said is helping to improve customer and supplier experience while benefiting safety, quality, delivery, and cost metrics.

Segment Performance and Challenges

The company's performance across business segments showed varying results. The Natural segment demonstrated strength with sales of $4.00 billion in the quarter, up 1.4% year-over-year, while the Conventional segment faced headwinds with sales of $3.41 billion, down 12.8%. The Retail segment also experienced pressure with sales of $573 million, representing an 8.8% decline.

The quarter was impacted by $15 million in costs associated with a previously disclosed cyber incident, which affected both gross profit and operating expenses. The company noted that operating expenses as a percentage of net sales increased to 13.6% from 13.2% in the prior-year quarter, driven by the deleveraging impact on fixed costs from lost sales attributable to the cyber incident.

For more detailed earnings analysis and future estimates, visit the UNFI earnings and estimates page.

Disclaimer: This article is for informational purposes only and does not constitute investment advice. The information presented should not be interpreted as a recommendation to buy or sell any security. Investors should conduct their own research and consult with a financial advisor before making investment decisions.