← Back

UNFI: UNFI's Q1 Results Exceed Expectations, Driven by Natural Segment Growth

United Natural Foods, Inc. (UNFI) reported net sales of $7.8 billion for the first quarter of fiscal 2026, roughly flat compared to the prior year, with the natural segment growing 11% driven by strong unit growth, new business projects, and secular strength in natural, organic, and specialty products. The company's adjusted EBITDA was $107 million, up 25% year over year, and free cash flow improved by over $100 million. UNFI's earnings per share (EPS) came in at $0.56, beating estimates of $0.39. Gross margin rate was 13.4%, up 20 basis points versus the prior year quarter, and operating expense rate was 12.7% of net sales, compared to 12.9% last year.

UNFI

USD 34.11

2.37%

A-Score: 4.4/10

Publication date: December 2, 2025

Full Report

Author: Analystock.ai

📋 Highlights
  • Adjusted EBITDA Growth: EBITDA surged 25% YoY to $107M, with free cash flow up over $100M vs. prior year.
  • Natural Segment Strength: Natural sales grew 11% driven by unit volume, new projects, and secular demand, offsetting conventional segment declines.
  • Gross Margin Expansion: Gross margin rate reached 13.4% (+20 bps YoY), while net leverage ratio dropped to 3.2x from 4.2x.
  • Annual Outlook Affirmed: EBITDA guidance of $630M–$700M and sales of $31.6B–$32B, with debt reduction target of ≤2.5x leverage by 2026.

Segment Performance

The natural segment's strong growth was a key driver of UNFI's results, offsetting declines in the conventional segment. The company's Q1 EBITDA was $167 million, reflecting the benefit of accretive network optimization, supplier programs, and temporary procurement gains. UNFI expects the natural segment to continue growing at a mid-single digit rate in the long term.

Outlook and Guidance

UNFI affirmed its annual outlook for all key financial metrics, including sales of $31.6 billion to $32 billion, adjusted EBITDA of $630 to $700 million, and adjusted EPS range of $1.50 to $2.30 per share. The company expects to prioritize reducing net debt and improve its net leverage ratio to 2.5 times or less by year end. Analysts estimate next year's revenue growth at 0.5%.

Valuation and Capital Allocation

UNFI's current valuation metrics indicate a Price-to-Sales Ratio of 0.06 and an EV/EBITDA ratio of 22.98. The company's goal is to deleverage to 2.5 times or lower by the end of 2026 and to 2 times or less in 2027. UNFI remains focused on reducing debt, and free cash flow performance is expected to be strong, with a goal to consume the $250 million CapEx envelope.

Operational Focus

The company is focused on improving operational execution, service levels, profitability, free cash flow, and capital structure. UNFI sees opportunities to help customers win through innovation and differentiation, particularly in the natural and organic segment, and is working to increase penetration across good, better, and best tiers in its private label portfolio.

UNFI's A-Score