United Natural Foods Inc. (NYSE: UNFI) reported fourth-quarter fiscal 2026 results on September 8, posting a sharp improvement in profitability even as sales edged lower, driven by cost discipline and operational gains across its distribution network.
Net sales for the quarter fell 0.7% to $7.642 billion from $7.696 billion a year earlier. The decline reflected roughly 500 basis points from planned optimization actions and 150 basis points from short-term project work, partially offset by the lapping of last year's cybersecurity incident. On a full-year basis, net sales came in at $31.152 billion, down 2.0% from $31.784 billion in fiscal 2025.
Adjusted EBITDA surged 48.3% to $172 million from $116 million in the year-ago quarter, while adjusted EPS swung to $0.69 from a loss of $0.11. For the full fiscal year, adjusted EBITDA climbed 27.0% to $701 million from $518 million, and adjusted EPS rose to $2.65 from $0.71.
Free cash flow reached a record annual level of $323 million, up $84 million from the prior year. Net debt declined to $1.539 billion, down $295 million year over year — the lowest level since fiscal 2018. The net leverage ratio improved to 2.2x, down 1.1 turns from 3.3x a year earlier and 0.3x sequentially from the third quarter.
Segment performance showed mixed results. The conventional segment posted a $293 million sales decline but led EBITDA growth with a $39 million year-over-year increase. The natural segment added $262 million in sales and contributed an additional $5 million in adjusted EBITDA. Retail operations saw a $45 million sales decrease, while other operations added $11 million in adjusted EBITDA.
The company also highlighted several operational improvements: fill rates rose 2 percentage points, on-time delivery increased 5 percentage points, and throughput jumped 12 percentage points year over year. UNFI completed the rollout of an AI-based inventory planning platform and deployed Lean daily management practices across 44 distribution centers. Over 130 new private brand innovations were introduced, and AI-enabled features were deployed on the UNFI Insights platform.
Looking ahead to fiscal year 2027, UNFI raised its adjusted EBITDA target to a range of $730 million to $780 million, with a midpoint of $755 million representing 8% growth from fiscal 2026. The company projected net sales of $31.2 billion to $31.8 billion, approximately 1% growth at the midpoint, and adjusted EPS of $3.00 to $3.50, implying 23% growth at the midpoint. Free cash flow is guided to a range of $275 million to $325 million, maintaining a $300 million midpoint. Capital and cloud implementation expenditures are expected to total approximately $300 million, about $50 million more than fiscal 2026. The company reiterated its target for the net leverage ratio to fall below 2.0x by the end of fiscal 2027.
CEO Sandy Douglas said disciplined execution of the value-creation strategy is generating strong adjusted EBITDA and free cash flow while continuing to advance capability building and strategically invest in technology and next-generation supply chain solutions. President and COO Matteo Tarditi noted the company is helping customers execute differentiation strategies and supporting supplier growth while continuing to improve service levels through operational discipline.
