United Natural Foods takes a hit in Q3

Despite a sluggish third quarter which saw net income decrease more than 89% year-over-year, United Natural Foods, Inc. still says the customer is always right … and UNFI customers are also telling the company that it, too, is on the right track.

Net sales were on the uptick at 3.7% ($7.5 billion), but on top of the net income hit United Natural Foods (Providence, R.I.) saw its gross profit drop $12 million, or 1.2%, to $1 billion compared to Q3 2022 numbers. Adjusted EBITDA declined 18.9% to $159 million and adjusted EPS was down almost 51% to $159 million vs. 2022.

“Customers continue to tell us we have the right products and value-added services,” UNFI CEO Sandy Douglas said on the earnings call. “They’re optimistic we’re taking the appropriate actions to help them plan and execute their go-to-market strategies and continuing to improve our execution capabilities in support of their business growth.”

Douglas also said work is underway on longer-term improvement efforts and that the company is focused on taking immediate cost mitigation actions to improve the profitability of the business in the near term, with these near-term profitability enhancements projected to deliver over $100 million of annualized benefits.

“We are confident that our short- and longer-term actions will make UNFI a stronger, more efficient company better positioned to serve customers and suppliers and deliver increasing shareholder value,” she added.

Related:UNFI comes under fire for misleading shareholders

UNFI blames the poor third quarter on a challenging operating and macroeconomic backdrop behind the decline in gross margins. It all led to lower inflationary benefits primarily related to reduced procurement gains and  higher shrink.