UNFI to cut 150 jobs as it streamlines regional operating structure

About a week after its CEO cited "deep disappointment" with quarterly results, United Natural Foods Inc. (UNFI) has unveiled plans to consolidate from four operating regions to three, with ensuing job cuts.

Providence, Rhode Island-based UNFI said late Tuesday that the new regional divisions will be called East, Central and West, compared with the previous Atlantic, South, Central and Pacific operating units. With the restructuring, about 150 positions—mainly management and supervisory posts—will be terminated, the grocery distributor reported.

UNFI noted that the geographic streamlining will simplify the company’s structure and create a more efficient business model—via faster decision-making and fewer administrative layers—for driving independent retailer and regional customer growth and profitability.

The revamped operating organization will be structured as follows, according to UNFI:

• East Region: Covering Maine to Florida and ranging as far west as Tennessee, encompassing 22 distribution centers and serving more than 10,000 customers. Kelly Sosa will lead the unit as region president, East.

• Central Region: Spanning 21 states from the Mississippi River to the Rockies, with 16 distribution centers and about 9,000 customers. It will be led by Tandy Harvey as region president, Central.

• West Region: Encompassing 10 states from Utah to Alaska and servicing approximately 11,000 customers from 14 distribution centers, led by Bob Garibaldi as region president, West.

UNFI said Sosa, Harvey and Garibaldi will continue to report to Chief Customer Officer Steve Dietz. The national accounts team—supporting the distributor’s largest national retailers and online retailers—will continue to be led by David Matthews, and Stacey Kravitz will remain leader of the UNFI Canada business. Matthews and Kravitz will continue to report to Martin.

“These changes are a step in our transformation plan. The regional realignment will decrease layers of administrative management, increase leaders’ span of geographic responsibility, better align us to serve customers with less complexity, and support faster decision making,” CEO Sandy Douglas said in a statement on Tuesday. “These changes are also intended to make our company more efficient and more profitable.”

The regional reorganization follows other moves by UNFI to shape operations around strategic initiatives. Last July, the company announced a new leadership and organizational structure comprised of four growth platforms—services, wholesale, retail and corporate/business transformation—linked to its strategic priorities. And then this past March, UNFI promoted Erin Horvath to chief operating officer (from chief supply chain transformation officer) and Louis Martin to president of wholesale (from chief strategy and transformation officer) to more sharply align leadership teams and resources with the company’s customer-centric strategy and transformation game plan.

Douglas took the wraps off UNFI’s transformation effort in early March when reporting fiscal 2023 second-quarter results, which included a plunge in earnings. Key initiatives in the transformation plan include network automation and optimization, commercial value creation, digital offering enhancement, and infrastructure unification and modernization.

Last week, Douglas cited “profitability weakness” as UNFI reported a poor bottom-line performance for the third quarter. He told analysts in a conference call that “a challenging environment” post-pandemic has “created significant volatility, which has been difficult for us to anticipate.” (Call transcript provided by AlphaSense.)

The CEO also indicated that structural changes were upcoming.

“We continue to get validation from our customers and our top-line results that we’re making the right strategic decisions and are actively building upon our customer and supplier value propositions. Our pipeline remains strong. Our high-margin service business continues to grow, and our private-brand business continues to help our customers more effectively to compete,” Douglas said in the June 7 call. “We now need to accelerate our efforts to combine our unmatched market offerings with a more efficient, dynamic and digital-oriented operating model so that we can more adeptly anticipate and more efficiently respond to changing market conditions.”

North America’s largest publicly traded grocery distributor, UNFI operates 56 distribution centers and supplies more than 30,000 retailers in the United States and Canada, including natural product superstores, independent retailers, conventional supermarket chains, e-commerce retailers and foodservice providers.