United Natural Foods, Inc. (UNFI), a leading grocery wholesaler in North America, reported its third quarter fiscal 2025 financial results, showing continued sales growth. For the third quarter ended May 3, 2025, net sales increased by 7.5% to approximately $8.1 billion, driven mainly by a 4% increase in wholesale unit volumes. The profitability metrics were notable as adjusted EBITDA rose 20.8% to $157 million, with an adjusted EPS of $0.44, up from $0.10 in the same quarter last year.

There have been significant operational challenges, including an IT security incident disclosed on June 5, 2025. Despite this disruption, UNFI’s adjusted EBITDA margin improved to 2%, representing the highest rate recorded in two years. Additionally, free cash flow reached $119 million, compared to $49 million in the third quarter of fiscal 2024.

The company’s net loss narrowed to $7 million compared to a loss of $21 million in the prior year’s quarter. Total operating expenses were reported at $1.025 billion, or 12.7% of net sales, down from 13.2% in the prior year quarter, indicating a decrease in operating expenses as a percentage of sales driven by improved efficiencies. However, the gross profit margin declined 30 basis points to 13.4%, attributable to product mix and margin rate adjustments.

UNFI’s net debt decreased to approximately $1.93 billion, contributing to a net leverage ratio of 3.3x as of the end of the quarter. This is down from 4.6x reported a year prior. The company reiterated its capital expenditures guidance of approximately $300 million for the fiscal year.

Looking ahead, UNFI maintained its full-year outlook for net sales and adjusted EBITDA, despite updating its guidance for GAAP net income due to costs associated with terminating a distribution agreement with Key Food. Specifically, the termination fee is projected to be $53 million and is expected to impact free cash flow in the fourth quarter.

Overall, UNFI’s third quarter demonstrated solid sales growth and improved margins amid operational hurdles, while the financial outlook remains stable with a focus on maintaining free cash flow and debt reduction strategies.