UNFI’s Blueprint: Tech and Efficiency to Fuel Double-Digit Growth

NEW YORK, NY – December 10, 2025 – In a packed room of investors and analysts, United Natural Foods, Inc. (NYSE: UNFI) laid out a multi-year strategy that pivots sharply from pure scale towards tech-driven efficiency and profitability. The grocery wholesale giant unveiled ambitious financial targets for fiscal 2028, signaling a high-stakes bet that deep operational transformation can deliver low-double-digit earnings growth even as top-line sales growth moderates.

The plan, detailed at the company's 2025 Investor Day, is a clear response to the intense pressures of the modern food industry: razor-thin margins, fierce competition, and the relentless demand for supply chain innovation. UNFI is no longer just moving boxes; it's building a digital and operational nervous system designed to make itself indispensable to its 30,000-plus retail customers.

A New Financial Algorithm

At the heart of the announcement is a new long-term financial algorithm for fiscal 2025 through 2028. UNFI projects a modest low-single-digit average annual growth in net sales, targeting approximately $33 billion by fiscal 2028—a slight increase from its fiscal 2025 revenue of $31.78 billion. The conservatism in this forecast is telling; the real story lies in the company's profitability and cash flow ambitions.

UNFI is targeting low-double-digit average annual growth in Adjusted EBITDA, aiming to reach approximately $800 million by fiscal 2028. This represents a significant leap from the $521 million reported for the trailing twelve months and suggests a profound focus on margin expansion. This ambition is further bolstered by a goal to generate approximately $300 million in free cash flow annually from fiscal 2026 onwards, a target that appears achievable given recent performance.

These targets are not based on wishful thinking. Recent results provide a glimpse into the strategy's early impact. In the first quarter of fiscal 2026, while net sales saw a minor dip of 0.4%—partly due to the strategic exit from less profitable business—Adjusted EBITDA surged by nearly 25% year-over-year to $167 million. This decoupling of sales growth from profit growth is the core of UNFI's new value proposition.

"We are advancing our strategy and building unique capabilities to help our customers and suppliers more effectively differentiate and compete in the marketplace," said Sandy Douglas, UNFI’s Chief Executive Officer, emphasizing the partner-centric approach of the new plan.

The Engine Room: A Next-Generation Supply Chain

The $800 million EBITDA target hinges almost entirely on UNFI’s ability to execute a sweeping operational overhaul. The company is pouring investment into what it calls a "next-generation supply chain," moving beyond incremental improvements to fundamental process re-engineering.

A key driver of this is the widespread implementation of "Lean Daily Management" processes, now active across 34 of its distribution centers. This methodology, borrowed from advanced manufacturing, focuses on continuous small improvements to drive significant aggregate gains. The results are already materializing: warehouse productivity, measured in cases handled per hour, has improved by over 2% year-over-year and is up nearly 10% from two years ago—a transformative gain in the world of logistics.

This is complemented by a deliberate network optimization strategy. UNFI is not afraid to prune its operations for greater efficiency, as seen in the planned transition out of its Allentown, Pennsylvania distribution center. While this move is expected to suppress top-line sales growth by approximately 3% in fiscal 2026, management anticipates it will be a net positive for profitability and free cash flow. This surgical approach to its network footprint marks a shift from a growth-at-all-costs mentality to one of profitable, sustainable operations.

More Than a Wholesaler: Becoming an Indispensable Partner

UNFI's strategy extends beyond its own four walls, aiming to embed its services more deeply into its customers' operations. The company is enhancing its value-added services in customer stewardship, merchandising support, and digital services, effectively transforming its role from a simple distributor to a strategic partner.

This involves leveraging its vast repository of data to provide retailers with market insights, shelf-management expertise, and support for building their private brand portfolios. In an era where data is currency, UNFI is positioning itself as a central intelligence hub for independent grocers and regional chains that lack the resources of national behemoths. By helping its customers compete more effectively against larger rivals, UNFI creates a stickier, more symbiotic relationship that insulates it from purely price-based competition.

This partnership model is especially critical as UNFI leans into its strengths in the natural, organic, and specialty food segments. While its conventional food business undergoes optimization, the natural products category continues to be a growth engine, with sales growing 7.2% in fiscal 2025. By providing specialized services and insights in this high-demand area, UNFI strengthens its moat as the premier wholesaler for retailers catering to health-conscious consumers.

Navigating the Headwinds

Despite the promising strategy and early signs of success, UNFI's path to 2028 is not without significant obstacles. The grocery wholesale industry remains a low-margin, high-volume game, and the company is navigating a complex web of risks. Intense competition from other large distributors and the ongoing consolidation of retailers continue to exert pressure on pricing and market share.

Furthermore, the company's reliance on its largest customer, which accounted for a quarter of its sales in fiscal 2025, remains a point of concern for investors, highlighting the potential impact of any single relationship change. Execution risk is also paramount; the ambitious supply chain and technology initiatives must be implemented flawlessly to yield the projected financial benefits. Past challenges, including a material cybersecurity incident in fiscal 2025, underscore the operational vulnerabilities inherent in such a large and complex network.

UNFI's leadership appears to be tackling these challenges head-on. The focus on deleveraging the balance sheet, improving free cash flow, and driving operational efficiencies is a direct response to these external and internal pressures. The strategy laid out on Investor Day is an acknowledgement that in the future of food distribution, the winners will not be the biggest, but the smartest, fastest, and most integrated players in the value chain.