- United Natural Foods Inc (UNFI) reported Q2 2025 results with revenue of $8.158 billion and adjusted EBITDA of $145 million, up from the prior-year quarter, underscoring ongoing momentum from the company’s multi-year plan and lean transformation. The quarter reflected solid organic growth led by the natural products segment (over 8% year-over-year), with wholesale volumes up about 3% and retail performance modestly pressured by a sequence of store closures. Free cash flow (FCF) surged to $193 million, lifting YTD FCF to just over $30 million and driving a meaningful reduction in net debt toward a net leverage of 3.7x, the lowest since 2023, bolstering balance-sheet resilience.
- Management raised the 2025 outlook for all metrics other than capital spending. The full-year net sales guidance was adjusted to $31.3–$31.7 billion (midpoint about 2.3% higher vs. last year), with adjusted EBITDA guidance increased to $550–$580 million (midpoint up more than 11% year over year). Adjusted EPS is now guided to $0.70–$0.90 for 2025. The company anticipates a margin rate expansion of roughly 10 basis points in the second half, driven by ongoing lean initiatives and productivity improvements. Full-year free cash flow is now expected to be at least $150 million.
- Strategic actions highlighted by management include: (i) realignment of the wholesale business into two product-centered divisions (Conventional and Natural Organic & Fresh) to enhance category expertise and customer solutions, (ii) expansion of lean daily management (LDM) across additional distribution centers to lift efficiency and safety, (iii) network optimization including Fort Wayne DC consolidation and planned sale of the Billings DC, with proceeds aimed at debt reduction, and (iv) efforts to accelerate value creation for customers and suppliers via enhanced services, merchandising, and private-brand investments. These moves are intended to support UNFI’s longer-term fiscal 2027 targets and deleveraging goals while sustaining growth in a large $90B+ addressable market.
- Risks remain predominately around macro demand visibility, integration execution (DC realignment and divestitures), tariff and import dynamics, and the ability to translate near-term operating improvements into sustained margin expansion under a fluctuating cost environment. Nonetheless, the current trajectory suggests a constructive earnings trajectory if the company maintains its growth cadence in natural/organic and successfully scales its new go-to-market model.