United Natural Foods Beats Q1 Estimates On Positive Volume Trends, Lifts FY25 Guidance

Grocery wholesaler United Natural Foods Inc UNFI shares are trading higher after the company reported first-quarter FY25 earnings.

The company reported a sales increase of 4.2% year over year to $7.87 billion, beating the analyst consensus estimate of $7.61 billion.

Revenue growth is driven by a 2% increase in wholesale unit volumes, boosted by new business from both existing and new customers, along with inflation.

Gross margin contracted to 13.2% from 13.6% last year due to weak product margin rates and business mix. The gross profit upped 0.8% to $1.0 billion.

Adjusted EBITDA rose 14.5% to $134 million. Adjusted EPS of $0.16 beat the consensus loss estimate of $0.01.

Free cash flow stood at $(159) million in the quarter. As of November 2, the company had approximately $37 million in cash, plus the unused capacity of around $1.14 billion under its asset-based lending facility.

Sandy Douglas, UNFI’s Chief Executive Officer, said, “We’re encouraged by positive volume trends attributable to new business with existing customers and new customer additions. This volume strength primarily reflects successful execution by our customer base, supported by UNFI’s value-added positioning and unique go-to-market strategy.”

Outlook: United Natural Foods revised its outlook for FY25 sales to $30.6 billion-$31.0 billion (from $30.3 billion – $30.8 billion) vs. consensus of $30.7 billion) and adjusted EPS to $0.40 – $0.80 (from $0.20 – $0.80) versus the consensus of $0.55.

Investors can gain exposure to the stock via Invesco S&P SmallCap Consumer Staples ETF PSCC and Invesco Exchange-Traded Fund Trust II Invesco S&P SmallCap 600 Revenue ETF RWJ.

Price Action: UNFI shares are up 6.81% at $26.36 premarket at the last check Tuesday.

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