In the midst of a turnaround plan that began with a new president and CEO, wholesale distributor United Natural Foods, Inc., (UNFI) did not have the ideal start to its 2024 fiscal year, but the company’s CEO said he believes that may be attributed to rising deflation.
In its first quarter earnings statement, released Wednesday, UNFI saw net sales increase just 0.3% year-over-year. CEO Sandy Douglas said he believes steadily decreasing inflation is partly behind the less-than-ideal numbers. The distributor also experienced a net loss of $39 million and its adjusted EBITDA dropped 43.5% to $117 million.
Gross profit over the opening months was $1 billion, a 6% year-over-year decrease, or $66 million.
“Our performance this quarter exceeded our expectations as we drove improved operational execution, which helped deliver savings from our near-term value creation initiatives earlier in the year than previously expected. These savings partially offset the anticipated decline in procurement gains resulting from lower levels of inflation,” said Douglas.
UNFI is trying to right the ship following a string of disappointing quarterly performances. The Providence, R.I.-based retailer’s current strategy involves unifying and modernizing systems, improving digital offerings, and automating and optimizing supply chain capabilities in order to produce profitable growth.
Despite the sluggish start to fiscal year 2024, UNFI is not ready to change its projection for net sales for the new fiscal year. During the first quarter earnings call the grocer affirmed its 2024 outlook of net sales falling in the range of $30.9 billion and $31.5 billion. Adjusted EBITDA also remains unchanged ($450 million-$550 million). However, UNFI updated net losses from $36 million-$110 million to $46 million-$120 million.
“Given our leadership position and the tremendous long-term value creation opportunity we see for our customers, suppliers, and our shareholders, we refuse to be incremental in our approach,” UNFI said in a statement. “We remain focused on sustaining operating and transformation momentum as we service our customers throughout the busy holiday season and will continue to drive operational improvement as quickly as possible.”