United Natural Foods (NYSE: UNFI) experienced a significant drop in early trading on Tuesday after its fourth-quarter report fell short of revenue estimates and its profit guidance fell well below expectations. The company’s profitability was primarily affected by a decrease in inflation-driven procurement gains and increased shrinkage, according to CEO Sandy Douglas. The company expects further challenges in the first half of fiscal 2024 as it continues to cycle through elevated inflationary benefits.
Looking ahead, United Natural Foods forecasts sales of $30.9 billion to $31.5 billion and an EPS of -$0.88 to -$0.38 for 2024, both of which are below consensus estimates. Additionally, the company’s adjusted EBITDA guidance of $450 million to $550 million also fell short of expectations. The outlook reflects lower anticipated procurement gains due to moderating levels of inflation and the reintroduction of performance-based incentive cash compensation in fiscal 2024.
To enhance the company’s performance and drive shareholder value creation, United Natural Foods announced the addition of several new members to its board and stated that the board will oversee a financial review. These actions are part of the company’s strategy to accelerate its transformation and position itself for both short- and long-term success.
As a result of the disappointing report, shares of United Natural Foods slid by 19.98% in premarket trading, hitting a new 52-week low of $15.14. These developments highlight the challenges the company faces and the need for strategic initiatives to ensure its future growth and profitability.