UNFI Reports Strong Q2 2025 Earnings, Raises Full-Year Guidance
- Hardik Shah
- Mar 11
- 3 min read
TL;DR
Revenue Growth: Net sales increased 4.9% year-over-year to $8.2 billion, driven by natural product growth.
Profitability Improvement: Adjusted EBITDA grew 13.3% to $145 million, with free cash flow up by $77 million.
Strategic Execution: Successful execution of cost efficiencies, supplier partnerships, and network optimization.
Financial Results
UNFI operates as a premier grocery wholesaler, distributing a diverse range of natural, organic, and conventional grocery products to over 30,000 locations across North America.
The company is structured into three segments:
Natural Products: $4.02 billion in Q2 revenue (+8.2% YoY)
Conventional Products: $3.86 billion in Q2 revenue (+2.1% YoY)
Retail: $610 million in Q2 revenue (-3.3% YoY, impacted by store closures)
UNFI Earnings
Gross Profit: $1.1 billion (+3.6% YoY), with a 13.1% margin.
Operating Expenses: Declined to 12.6% of net sales from 13.0% last year.
Net Loss: $(3) million, an improvement from $(15) million last year.
Adjusted EPS: $0.22, a significant jump from $0.07 in Q2 2024.
Free Cash Flow: $193 million, up 66% YoY, helping net leverage decline to 3.7x.
Debt Reduction: Net debt decreased by $182 million QoQ.
Management Guidance
UNFI raised its full-year guidance, projecting:
Net Sales: $31.3 - $31.7 billion (up from $30.6 - $31.0 billion)
Adjusted EBITDA: $550 - $580 million (up from $530 - $580 million)
Free Cash Flow: >$150 million (up from >$100 million)
CEO Sandy Douglas emphasized,"We delivered solid sales growth and our sixth consecutive quarter of sequentially improving adjusted EBITDA. Our focus remains on executing our multi-year strategy and strengthening partnerships."
Operational Performance
Industry & Market Trends
Inflation remained stable at 1.5%, lower than the prior year.
The natural and organic category continues to outperform conventional products.
Consumer behavior remains resilient, with no major shifts in demand despite macroeconomic changes.
Key Business Milestones
Product-Focused Realignment: UNFI completed a structural realignment of its wholesale business into natural and conventional divisions for improved service and differentiation.
Network Optimization: The Fort Wayne distribution center was closed in February, with volume consolidated into more modern and efficient facilities.
Lean Management Expansion: Now implemented in nine distribution centers, driving productivity improvements.
Challenges & Risks
Gross Margin Pressure: Margins fell slightly due to product mix shifts and strategic pricing investments.
Retail Headwinds: Retail sales declined due to five store closures over the past 12 months.
Customer Transitioning: As part of network optimization, UNFI is renegotiating customer agreements—exploring exit strategies for non-profitable partnerships.
Strategic Initiatives
Supplier Collaboration: UNFI expanded its supplier programs to improve pricing efficiency and promotional impact.
Retail Media & Digital Growth: Investments in e-commerce and digital services aim to help retailers better compete in an evolving grocery landscape.
AI & Automation: UNFI is leveraging data analytics and process automation to enhance distribution efficiency.
Debt & Liquidity: UNFI reduced total debt to $2.05 billion, with $1.31 billion in liquidity.
CFO Matteo Tarditi noted,"We are improving forecasting, refining procurement models, and optimizing our supply chain—resulting in reduced inventory days and increased free cash flow."
The Bottom Line
UNFI's strong Q2 2025 performance underscores its strategic execution, operational efficiency, and market leadership. With revenue and profitability on the rise, supply chain optimizations in progress, and increased free cash flow, UNFI is well-positioned to drive sustained long-term growth.
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