United Natural Q2 Results Surpass Expectations, Sales Outlook Reduced

United Natural Foods, Inc. Reports Improved Earnings but Lower Revenue in Q2 FY2026

United Natural Foods, Inc. (UNFI) announced its financial results for the second quarter of fiscal 2026, showing a year-over-year increase in earnings per share, which surpassed analyst expectations. However, the company’s revenue declined compared to the same period last year and fell short of consensus estimates. The company also revised its guidance for the remainder of the fiscal year.

Quarterly Earnings Overview

For the quarter, United Natural Foods posted adjusted earnings of $0.62 per share, outperforming the Zacks Consensus Estimate of $0.51 and rising from $0.22 per share in the comparable period last year.

Revenue and Sales Performance

Net sales for the quarter reached $7.95 billion, representing a 2.6% decrease from the prior year and missing the expected $8.15 billion. This reduction included a roughly 500 basis point impact from the company’s optimization strategies. The decline was mainly attributed to lower conventional sales, largely due to the closure of the Allentown, PA, distribution center earlier in the fiscal year.

Segment Results

• The Natural segment saw a 6.7% increase in sales year over year.
• The Conventional segment experienced a 12.1% drop in sales.
• The Retail segment’s sales declined by 8.2% compared to the previous year.

Profitability and Expenses

Gross profit stood at $1.05 billion, down 2.4% from the previous year. The gross margin improved slightly to 13.2%, up from 13.1%, driven by network optimization, a more favorable customer mix, and better procurement results, though partially offset by a weaker margin in the Retail segment.

Operating expenses totaled $972 million, a reduction from $1.03 billion a year ago. As a percentage of sales, operating expenses improved to 12.2% from 12.6%, reflecting the benefits of cost-saving efforts and enhanced productivity at distribution centers.

Adjusted EBITDA rose to $179 million, marking a 23.4% increase from $145 million in the same quarter last year.

Financial Position

As of January 31, 2026, United Natural Foods reported total liquidity of $1.34 billion, which included nearly $52 million in cash and $1.29 billion in available credit under its asset-based lending facility.

Free cash flow for the quarter was $243 million, up from $193 million in the prior year, with $283 million generated from operating activities and $40 million spent on capital expenditures.

Net debt at the end of the quarter was $1.68 billion, resulting in a net leverage ratio of 2.7x.

Updated Fiscal 2026 Outlook

The company revised its full-year guidance as follows:

• Net sales are now expected to range between $31 billion and $31.4 billion, down from the previous forecast of $31.6 billion to $32 billion.
• Adjusted earnings per share are projected at $2.30 to $2.70, an increase from the earlier range of $1.50 to $2.30.
• Adjusted EBITDA is anticipated to be between $680 million and $710 million, up from the prior estimate of $630 million to $700 million.
• Capital and cloud implementation spending is forecasted at approximately $250 million.
• Free cash flow is expected to reach around $330 million for the year.

Over the past three months, UNFI shares have climbed 15.9%, outperforming the broader food industry, which declined by 1.9% during the same period.

Other Noteworthy Stocks

• Mama's Creations, Inc. (MAMA): Specializes in fresh deli-prepared foods in the U.S. and currently holds a Zacks Rank of 1 (Strong Buy). Analyst projections suggest a 39.9% increase in sales and a 44.4% rise in earnings for the current fiscal year compared to last year. The company has delivered an average earnings surprise of 133.3% over the past four quarters.
• The Hershey Company (HSY): A global producer of confectionery and pantry items, Hershey holds a Zacks Rank #2 (Buy). The company has averaged a 17.2% earnings surprise over the last four quarters, with current-year sales and earnings expected to grow by 4.8% and 29.3%, respectively.
• US Foods Holding Corp. (USFD): Distributes a wide range of food and non-food products to foodservice clients in the U.S. and carries a Zacks Rank #2. The company has posted an average earnings surprise of 2.2% over the past four quarters, with analysts forecasting sales and earnings growth of 5.4% and 20.9% for the current fiscal year.

Emerging Opportunities in Quantum Computing

Quantum computing is rapidly advancing and is poised to surpass even artificial intelligence in technological impact. Major technology companies like Microsoft, Google, Amazon, Oracle, Meta, and Tesla are racing to incorporate quantum computing into their operations.

Kevin Cook, a Senior Stock Strategist, has identified seven stocks that are well-positioned to benefit from the growth of quantum computing in his report, Beyond AI: The Quantum Leap in Computing Power. Cook, who previously recognized NVIDIA’s potential in 2016, now highlights quantum computing as the next major investment opportunity.

Additional Resources