UNFI Q2 Revenue Up, Net Income Falls

The addition of new business helped grow the top line, but continued economic headwinds had a negative impact on profitability.
Greg Sleter
Associate Publisher/Executive Editor
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A combination of new business and higher prices were key factors in the second quarter net sales gains at United Natural Foods, Inc., (UNFI).

For the 13 weeks ended Jan. 28, net sales were $7.8 billion, up 5.4% from the comparable quarter the previous year. Net income decreased 71.2% to $19 million and earnings per diluted share (EPS) decreased 71.3% to $0.31. This new business the company obtained in the quarter resulted from selling new or expanded categories to existing customers and adding new customers from our robust pipeline. These increases were partially offset by a decrease in units sold.

“While I’m pleased with our continued sales growth, profitability in the quarter was lower than recent levels and our plan,” said Sandy Douglas, UNFI’s CEO. “Profits were challenged as we did not repeat the significant level of procurement gains from rapidly accelerating inflation and inventory gains, due to supply chain volatility, that we experienced in the second quarter of last year. As a result of these challenges, we are reducing our profitability expectations for fiscal 2023 and withdrawing our fiscal 2024 targets.”

The company also updated its outlook for its fiscal year, raising net sales guidance to $30.1 billion to $30.5 billion, up from previous guidance of $29.8 billion to $30.4 billion. Net income is now expected to be between $90 million and $142 million, down from previous guidance of $247 million to $266 million. 

Douglas said the company’s customer-focused growth strategy is continuing to resonate with its large and diversified customer base. 

“We see significant opportunity to couple this continued revenue growth with a more efficient and profitable platform and structurally higher margins as we work to earn a higher share of our $140 billion core addressable market,” he said.