United Natural Foods profit plummets to $24M in fiscal 2023

PROVIDENCE – United Natural Foods Inc. saw its profit tumble to $24 million in the fiscal year that ended July 29 – down from a $248 million profit a year earlier – including a fourth quarter in which the natural and organic food company lost $68 million, according to its financial reports.

Earnings per share was 40 cents for the fiscal year, compared with $4.07 a year ago, the Providence-based company said.

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Net sales for the year totaled $30.27 billion, an increase from $28.9 billion one year prior. And revenue for the fourth quarter increased from $7.27 billion to $7.42 billion year over year.

At the same time, the company said the “cost of sales” was $1.4 billion higher for the year, and $231 million higher for the fourth quarter alone.

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While losing $68 million in its fourth quarter, the company had posted a $39 million profit in the same quarter a year ago.

“Our fourth quarter concluded a challenging year in which we continued to emphasize serving customers and suppliers, and we also worked diligently to improve operating effectiveness, efficiency and our technological capabilities,” United Natural Food CEO Sandy Douglas said in a statement. “While we grew sales across all of our customer channels, profitability declined primarily due to a decrease in inflation-driven procurement gains and elevated shrink.

“We expect further headwinds as we continue to cycle elevated inflationary benefits during the first half of fiscal 2024,” he said.

The earnings report and company guidance sent shares of United Natural Foods, which trades on the New York Stock Exchange, plummeting. At 10:50 a.m. Tuesday, UNFI was trading at $14.52 a share, down more than 23% on the day.

UNFI segment revenue in the 2023 fiscal year:

  • The company said it logged $30.2 billion in sales to chain stores, a 4.6% increase year over year.
  • Sales to independent retailers totaled $7.6 billion, a 4.6% increase from one year prior.
  • Sales to “supernatural” retailers, including Whole Foods Market Inc., totaled $6.3 billion, an 11.5% increase year over year.
  • Retail sales totaled $2.48 billion, a rise of 0.5% year over year.
  • Sales classified as “other” totaled $2.4 billion, an increase of 3.1% from one year prior.

“As we look to the new fiscal year, we’re focused on addressing near-term profitability while creating a structurally more efficient technology-enabled food retail services company that can better serve our customers and capitalize on the significant growth opportunities we see ahead,” Douglas said. “To that end, we’ve already captured nearly $100 million of near-term value creation initiatives, and we now expect to drive full-year operating margin benefits in fiscal 2024 of nearly $150 million from these actions. We’re continuing to invest in our supply chain and technology infrastructure to improve our cost structure and enhance the customer and supplier experience. We’re confident that combining our industry-leading position with a more dynamic and nimble UNFI under the guidance of our newly refreshed board puts us on a strong path to drive meaningful and sustainable long-term shareholder value creation.”