United Natural Foods Inc Goldman Sachs Global Consumer and Retail Conference

Thanks, Leah. It's good to be with everybody, and it's really a good time for us to have this conversation coming off of a really strong fiscal 2026, which is the second year of our new strategic plan, and a year into the three-year period that we talked about at our investor day last December with strong EBITDA performance of 26% last year right on our cash flow numbers and de-levering down from a high of 4, a couple of turns a couple of years ago, down to 2. It's a good time to talk about the future and the opportunity that's ahead.

Sure. Yeah, it is true. I joined the company right in the heart of COVID, and everyone remembers the supply chain challenges, the labor challenges, the more broader crisis in our communities that were going on, but significant amount of churn leading to that period of very aggressive inflation. During those years along the side, there was a lot of very strong profitability for independent grocers and distributors. As we pivoted out of that, we level set and had to stare straight in the eye what capability we had to manage in a very rapidly changing time. For UNFI, we set our foundation. We did a bunch of work to evaluate processes and systems and skills. I think that the area that I am most proud of is the work we have done on the leadership team. We recruited top talent from General Electric, from Coca-Cola, our CIOs from Mars.

We have also developed an internal team that, alongside our board, recast our strategy and focused it more directly on $90 billion of the wholesale market that represent retailers that are pursuing differentiation strategies. UNFI is really designed well for that because of our products, because of our services. We carry the full range of conventional and natural products. Over those two years, with additional focus and amping up the skills, we began the work of building the capabilities that would really differentiate us and then attacking the $4 billion of cost that represent the broad supply chain for the most part, and looking at ways to make it more effective and then more efficient. That has produced over two years 40% EBITDA improvement, significant free cash flow, and de-levering by two times.

I guess the way I close that out, because it was very challenging and we had to be very direct. The work that we have done and the team that we have built put us in really good position heading into the next year. Of course, we guided last week at high single digit coming off of 26% last year. We beat by a strong amount last year, and we decided to roll that forward into this year and increase what you would have expected out of us this year from Investor Day, and then we expect to accomplish that again next year. If there were a through line to looking ahead, I simply would say we are excited about the underlying growth that we have had over the last year, where we have removed the impact of the profitable optimization we have done.

The company will once again start to grow, and we expect to grow in the second half of the year. The opportunity for improvement, and we say this a lot internally, we have not even really begun. This is a big multi-company, many acquisitions over the years, business that is ready to significantly improve and create more value going forward.

Sure. Let me start that first by talking a little bit about how retailers are stratifying, because I think obviously that's our first focus. One of the myths in grocery retail is that the discounters are winning and everybody else is losing. Indeed, if you double-click on the everybody else, you find retailers that are differentiating in different ways. Pure play natural have tripled their share of retail over the last 20 years. They gained share last year, they did the year before, and I expect they'll continue. You have ethnic retailers, other forms of grocery stores that are pursuing differentiation strategies, and successfully. Good trade name up here in the Northeast would be Wegmans. Outstanding performer consistently over time. There are retailers pursuing various forms of differentiation strategies around the country.

Then there are retailers that are centrally positioned that have been donating share for a period of time. Many of them have set new courses for their companies, and we're working hand-in-hand with them to help them succeed and grow. That's where our $90 billion addressable market comes. Within that frame, we see a fair amount of strain in the consumer right now. Strain that comes from fuel expense, that comes from SNAP benefits. GLP-1s for UNFI, it's a negative in the sense that it's impacting volume, but it's a positive for us because people are eating healthier food. So we're well-positioned for that. But what amazes me is how retailers are responding. Inside that segmentation I sort of went through, retailers are doing just fine.

They're competing, they're winning, but they're having to meet the customer where their value is, and each of them are doing it in their own way, and we're trying to help them do it well.

Sure. I think if I were to go to sort of the central truth about cost, our job as a representative of retailers and consumers is to try to keep costs down, particularly costs of items that are comparable between our customers and discounters. That's an area of significant focus for us. Also products that are not comparable, simply because affordability is a major issue for their customers, and that's really important. We saw food inflation sort of moderate a little bit last year and more in sort of the longer term 2% to 3% range. Our outlook for FY 2027 is about the same, although it's dynamic and we're agile to be able to sort of move where it is with an effort, as I said, to continue to manage cost.