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United Natural Foods projects margin gains as network optimization advances
The company said fiscal 2027 guidance assumes a return to profitable growth in the second half, as it cycles through the final impacts of its network optimization program.
United Natural Foods expects its margin expansion to be driven by operational productivity rather than price increases, according to a Yahoo Finance earnings call summary. Management also attributed improvement efforts to internal efficiency initiatives, including a value creation strategy that delivered 27% full-year adjusted EBITDA growth despite reported sales declines from network optimization.
The company linked underlying sales growth to a $90 billion target addressable market for differentiated retailers, while noting those retailers increased their grocery industry share by 30 basis points. Operational changes include deploying “Lean” daily management across 44 distribution centers, which management said supported four consecutive quarters of fill rate and throughput gains.
Network optimization is also part of the plan, including consolidating the Racine facility into an automated Joliet distribution center to modernize the fleet and reduce long-term operating costs. Management highlighted natural product performance as continuing to outperform the broader market, citing sustained consumer demand for health-forward and specialty items.
For capital planning, the company projected fiscal 2027 capital expenditure of $300 million, focused on targeted automation and ERP deployment. It also said it expects to reduce net leverage to under 2.0x by the end of fiscal 2027 and is evaluating opportunistic share repurchases, with fiscal 2027 assumptions including low single-digit food inflation.