UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended ~~January~~October 28, 2023

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-15723

UNITED NATURAL FOODS, INC.

(Exact name of registrant as specified in its charter)


Delaware (State or other jurisdiction of incorporation or organization)						05-0376157 (I.R.S. Employer Identification No.)

313 Iron Horse Way, Providence, RI 02908
(Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (401) 528-8634

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.01	UNFI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of ~~March 3,~~December 1, 2023 there were ~~59,397,933~~59,407,969 shares of the registrant’s common stock, $0.01 par value per share, outstanding.

Table of Contents

TABLE OF CONTENTS


Part I.	Financial Information

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets (unaudited)	3

	Condensed Consolidated Statements of Operations (unaudited)	4

	Condensed Consolidated Statements of Comprehensive (Loss) Income (unaudited)	5

	Condensed Consolidated Statements of Stockholders’ Equity (unaudited)	6

	Condensed Consolidated Statements of Cash Flows (unaudited)	87

	Notes to Condensed Consolidated Financial Statements (unaudited)	98

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2624

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4035

Item 4.	Controls and Procedures	4035

Part II.	Other Information

Item 1.	Legal Proceedings	4135

Item 1A.	Risk Factors	4135

Item 2.	Unregistered Sales of Equity Securities ~~and~~ ,Use of Proceeds, and Issuer Purchases of Equity Securities	4136







Item 5.	~~Other Information~~	41

~~Item~~ 6.	Exhibits	4237

	Signatures	4338

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

UNITED NATURAL FOODS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited)

(in millions, except for par values)


		January 28, 2023		July 30, 2022			October 28, 2023		July 29, 2023
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	40	$	44	Cash and cash equivalents	$	37	$	37
Accounts receivable, net	Accounts receivable, net	992		1,214		Accounts receivable, net	1,013		889
Inventories, net	Inventories, net	2,512		2,355		Inventories, net	2,648		2,292
Prepaid expenses and other current assets	Prepaid expenses and other current assets	197		184		Prepaid expenses and other current assets	259		245
Total current assets	Total current assets	3,741		3,797		Total current assets	3,957		3,463
Property and equipment, net	Property and equipment, net	1,719		1,690		Property and equipment, net	1,744		1,767
Operating lease assets	Operating lease assets	1,218		1,176		Operating lease assets	1,218		1,228
Goodwill	Goodwill	20		20		Goodwill	19		20
Intangible assets, net	Intangible assets, net	783		819		Intangible assets, net	703		722
Deferred income taxes						Deferred income taxes	32		32
Other long-term assets	Other long-term assets	154		126		Other long-term assets	175		162
Total assets	Total assets	$	7,635	$	7,628	Total assets	$	7,848	$	7,394
LIABILITIES AND STOCKHOLDERS’ EQUITY	LIABILITIES AND STOCKHOLDERS’ EQUITY					LIABILITIES AND STOCKHOLDERS’ EQUITY
Accounts payable	Accounts payable	$	1,797	$	1,742	Accounts payable	$	1,934	$	1,781
Accrued expenses and other current liabilities	Accrued expenses and other current liabilities	249		260		Accrued expenses and other current liabilities	277		283
Accrued compensation and benefits	Accrued compensation and benefits	166		232		Accrued compensation and benefits	169		143
Current portion of operating lease liabilities	Current portion of operating lease liabilities	161		156		Current portion of operating lease liabilities	181		180
Current portion of long-term debt and finance lease liabilities	Current portion of long-term debt and finance lease liabilities	23		27		Current portion of long-term debt and finance lease liabilities	16		18
Total current liabilities	Total current liabilities	2,396		2,417		Total current liabilities	2,577		2,405
Long-term debt	Long-term debt	2,065		2,109		Long-term debt	2,296		1,956
Long-term operating lease liabilities	Long-term operating lease liabilities	1,107		1,067		Long-term operating lease liabilities	1,090		1,099
Long-term finance lease liabilities	Long-term finance lease liabilities	18		23		Long-term finance lease liabilities	10		12
Pension and other postretirement benefit obligations	Pension and other postretirement benefit obligations	18		18		Pension and other postretirement benefit obligations	16		16
Deferred income taxes		14		8

Other long-term liabilities	Other long-term liabilities	172		194		Other long-term liabilities	160		162
Total liabilities	Total liabilities	5,790		5,836		Total liabilities	6,149		5,650
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Stockholders’ equity:	Stockholders’ equity:					Stockholders’ equity:
Preferred stock, $0.01 par value, authorized 5.0 shares; none issued or outstanding	Preferred stock, $0.01 par value, authorized 5.0 shares; none issued or outstanding	—		—		Preferred stock, $0.01 par value, authorized 5.0 shares; none issued or outstanding	—		—
Common stock, $0.01 par value, authorized 100.0 shares; 60.9 shares issued and 59.6 shares outstanding at January 28, 2023; 58.9 shares issued and 58.3 shares outstanding at July 30, 2022		1		1
Common stock, $0.01 par value, authorized 100.0 shares; 61.9 shares issued and 59.4 shares outstanding at October 28, 2023; 61.0 shares issued and 58.5 shares outstanding at July 29, 2023						Common stock, $0.01 par value, authorized 100.0 shares; 61.9 shares issued and 59.4 shares outstanding at October 28, 2023; 61.0 shares issued and 58.5 shares outstanding at July 29, 2023	1		1
Additional paid-in capital	Additional paid-in capital	592		608		Additional paid-in capital	606		606
Treasury stock at cost	Treasury stock at cost	(53)		(24)		Treasury stock at cost	(86)		(86)
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(9)		(20)		Accumulated other comprehensive loss	(33)		(28)
Retained earnings	Retained earnings	1,311		1,226		Retained earnings	1,211		1,250
Total United Natural Foods, Inc. stockholders’ equity	Total United Natural Foods, Inc. stockholders’ equity	1,842		1,791		Total United Natural Foods, Inc. stockholders’ equity	1,699		1,743
Noncontrolling interests	Noncontrolling interests	3		1		Noncontrolling interests	—		1
Total stockholders’ equity	Total stockholders’ equity	1,845		1,792		Total stockholders’ equity	1,699		1,744
Total liabilities and stockholders’ equity	Total liabilities and stockholders’ equity	$	7,635	$	7,628	Total liabilities and stockholders’ equity	$	7,848	$	7,394

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

UNITED NATURAL FOODS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited)

(in millions, except for per share data)


		13-Week Period Ended				26-Week Period Ended					13-Week Period Ended
		January 28, 2023		January 29, 2022		January 28, 2023		January 29, 2022				October 28, 2023		October 29, 2022
Net sales	Net sales	$	7,816	$	7,416	$	15,348	$	14,413	Net sales		$	7,552	$	7,532
Cost of sales	Cost of sales	6,747		6,341		13,183		12,296		Cost of sales		6,522		6,436
Gross profit	Gross profit	1,069		1,075		2,165		2,117		Gross profit		1,030		1,096
Operating expenses	Operating expenses	1,002		944		2,002		1,876		Operating expenses		1,023		1,000
Restructuring, acquisition and integration related expenses	Restructuring, acquisition and integration related expenses	3		5		5		8		Restructuring, acquisition and integration related expenses		4		2
Loss (gain) on sale of assets		1		1		(4)		1
Operating income		63		125		162		232
Loss (gain) on sale of assets and other asset charges										Loss (gain) on sale of assets and other asset charges		19		(5)
Operating (loss) income										Operating (loss) income		(16)		99
Net periodic benefit income, excluding service cost	Net periodic benefit income, excluding service cost	(7)		(10)		(14)		(20)		Net periodic benefit income, excluding service cost		(3)		(7)
Interest expense, net	Interest expense, net	39		44		74		84		Interest expense, net		35		35
Other income, net	Other income, net	—		(2)		(1)		(1)		Other income, net		—		(1)
Income before income taxes		31		93		103		169
Provision for income taxes		9		25		14		24
Net income including noncontrolling interests		22		68		89		145
(Loss) income before income taxes										(Loss) income before income taxes		(48)		72
(Benefit) provision for income taxes										(Benefit) provision for income taxes		(9)		5
Net (loss) income including noncontrolling interests										Net (loss) income including noncontrolling interests		(39)		67
Less net income attributable to noncontrolling interests	Less net income attributable to noncontrolling interests	(3)		(2)		(4)		(3)		Less net income attributable to noncontrolling interests		—		(1)
Net income attributable to United Natural Foods, Inc.		$	19	$	66	$	85	$	142
Net (loss) income attributable to United Natural Foods, Inc.										Net (loss) income attributable to United Natural Foods, Inc.		$	(39)	$	66

Basic earnings per share		$	0.32	$	1.13	$	1.43	$	2.47
Diluted earnings per share		$	0.31	$	1.08	$	1.38	$	2.33
Basic (loss) earnings per share										Basic (loss) earnings per share		$	(0.67)	$	1.12
Diluted (loss) earnings per share										Diluted (loss) earnings per share		$	(0.67)	$	1.07

Weighted average shares outstanding:	Weighted average shares outstanding:									Weighted average shares outstanding:
Basic	Basic	59.8		58.3		59.3		57.6		Basic		58.7		58.8
Diluted	Diluted	61.0		61.0		61.3		61.0		Diluted		58.7		61.6

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

UNITED NATURAL FOODS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (unaudited)

(in millions)


		13-Week Period Ended			26-Week Period Ended							13-Week Period Ended
			January 28, 2023		January 29, 2022		January 28, 2023		January 29, 2022				October 28, 2023		October 29, 2022
Net income including noncontrolling interests			$	22	$	68	$	89	$	145
Net (loss) income including noncontrolling interests											Net (loss) income including noncontrolling interests		$	(39)	$	67
Other comprehensive (loss) income:	Other comprehensive (loss) income:										Other comprehensive (loss) income:
Recognition of pension and other postretirement benefit obligations, net of tax			1		1		1		2

Recognition of interest rate swap cash flow hedges, net of tax(1)	Recognition of interest rate swap cash flow hedges, net of tax(1)		(4)		15		14		28		Recognition of interest rate swap cash flow hedges, net of tax(1)		(3)		18
Foreign currency translation adjustments	Foreign currency translation adjustments		1		(2)		(2)		(2)		Foreign currency translation adjustments		(3)		(3)
Recognition of other cash flow derivatives, net of tax~~(2)~~	Recognition of other cash flow derivatives, net of tax~~(2)~~		(2)		1		(2)		2		Recognition of other cash flow derivatives, net of tax~~(2)~~		1		—
Total other comprehensive (loss) income	Total other comprehensive (loss) income		(4)		15		11		30		Total other comprehensive (loss) income		(5)		15
Less comprehensive income attributable to noncontrolling interests	Less comprehensive income attributable to noncontrolling interests		(3)		(2)		(4)		(3)		Less comprehensive income attributable to noncontrolling interests		—		(1)
Total comprehensive income attributable to United Natural Foods, Inc.			$	15	$	81	$	96	$	172
Total comprehensive (loss) income attributable to United Natural Foods, Inc.											Total comprehensive (loss) income attributable to United Natural Foods, Inc.		$	(44)	$	81

(1)Amounts are net of tax (benefit) expense of $(1) million and $6 million for the ~~second~~first quarters of fiscal ~~2023~~2024 and ~~2022, respectively, and $5 million and $10 million for fiscal~~ 2023 ~~and 2022 year-to-date, respectively.~~

~~(2)~~Amounts are net of tax (benefit) expense of $(1) million and $1 million for the second quarters of fiscal 2023 and 2022, respectively, and $(1) million and $1 million for fiscal 2023 and 2022 year-to-date,, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

UNITED NATURAL FOODS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the 13-week periods ended ~~January~~October 28, 2023 and ~~January~~October 29, 2022

(in millions)


		Common Stock			Treasury Stock			Additional Paid-in Capital				Accumulated Other Comprehensive Loss		Retained Earnings					Total United Natural Foods, Inc. Stockholders’ Equity			Noncontrolling Interests				Total Stockholders’ Equity			Common Stock				Treasury Stock			Additional Paid-in Capital				Accumulated Other Comprehensive (Loss) Income				Retained Earnings				Total United Natural Foods, Inc. Stockholders’ Equity				Noncontrolling Interests				Total Stockholders’ Equity
		Shares	Amount		Shares	Amount												Shares						Amount						Shares		Amount
Balances at October 29, 2022		60.9	$	1	1.0	$	(36)			$	583					$	(5)				$	1,292			$	1,835			$	—	$	1,835
Balances at July 29, 2023																												Balances at July 29, 2023	61.0		$	1	2.5	$	(86)			$	606			$	(28)			$	1,250			$	1,743			$	1			$	1,744
Restricted stock vestings																												Restricted stock vestings	0.9		—		—	—		(6)				—				—				(6)				—				(6)
Share-based compensation																												Share-based compensation	—		—		—	—		6				—				—				6				—				6
Other comprehensive loss																												Other comprehensive loss	—		—		—	—		—				(5)				—				(5)				—				(5)
Distributions to noncontrolling interests																												Distributions to noncontrolling interests	—		—		—	—		—				—				—				—				(1)				(1)
Net loss																												Net loss	—		—		—	—		—				—				(39)				(39)				—				(39)
Balances at October 28, 2023																												Balances at October 28, 2023	61.9		$	1	2.5	$	(86)	$	606			$	(33)			$	1,211			$	1,699			$	—			$	1,699

Balances at July 30, 2022																												Balances at July 30, 2022	58.9		$	1	0.6	$	(24)	$	608			$	(20)			$	1,226			$	1,791			$	1			$	1,792
Restricted stock vestings	Restricted stock vestings	—	—		—	—		(2)				—		—					(2)			—				(2)		Restricted stock vestings	2.0		—		—	—		(37)				—				—				(37)				—				(37)
Share-based compensation	Share-based compensation	—	—		—	—		11				—		—					11			—				11		Share-based compensation	—		—		—	—		12				—				—				12				—				12
Repurchases of common stock	Repurchases of common stock	—	—		0.3	(17)		—				—		—					(17)			—				(17)		Repurchases of common stock	—		—		0.4	(12)		—				—				—				(12)				—				(12)
Other comprehensive loss		—	—		—	—		—				(4)		—					(4)			—				(4)

Net income		—	—		—	—		—				—		19					19			3				22
Balances at January 28, 2023		60.9	$	1	1.3	$	(53)	$	592			$	(9)	$	1,311				$	1,842		$	3			$	1,845

Balances at October 30, 2021		58.7	$	1	0.6	$	(24)	$	582			$	(24)	$	1,054				$	1,589		$	(2)			$	1,587
Restricted stock vestings		0.1	—		—	—		(2)				—		—					(2)			—				(2)
Share-based compensation		—	—		—	—		12				—		—					12			—				12
Other comprehensive income	Other comprehensive income	—	—		—	—		—				15		—					15			—				15		Other comprehensive income	—		—		—	—		—				15				—				15				—				15
Distributions to noncontrolling interests	Distributions to noncontrolling interests	—	—		—	—		—				—		—					—			(1)				(1)		Distributions to noncontrolling interests	—		—		—	—		—				—				—				—				(2)				(2)
Proceeds from issuance of common stock, net		—	—		—	—		4				—		—					4			—				4
Net income	Net income	—	—		—	—		—				—		66					66			2				68		Net income	—		—		—	—		—				—				66				66				1				67
Balances at January 29, 2022		58.8	$	1	0.6	$	(24)	$	596			$	(9)	$	1,120				$	1,684		$	(1)			$	1,683
Balances at October 29, 2022																												Balances at October 29, 2022	60.9		$	1	1.0	$	(36)	$	583			$	(5)			$	1,292			$	1,835			$	—			$	1,835

See accompanying Notes to Condensed Consolidated Financial Statements.

~~Table of Contents~~

~~UNITED NATURAL FOODS, INC. AND SUBSIDIARIES~~

~~CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)~~

~~For the 26-week periods ended January 28, 2023 and January 29, 2022~~

~~(in millions)~~

Common Stock Treasury Stock Additional
Paid-in Capital Accumulated
Other
Comprehensive Loss Retained Earnings Total United Natural Foods, Inc.
Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity
Shares Amount Shares Amount
Balances at July 30, 2022 58.9 $ 1 0.6 $ (24) $ 608 $ (20) $ 1,226 $ 1,791 $ 1 $ 1,792
Restricted stock vestings 2.0 — — — (39) — — (39) — (39)
Share-based compensation — — — — 23 — — 23 — 23
Repurchases of common stock — — 0.7 (29) — — — (29) — (29)
Other comprehensive income — — — — — 11 — 11 — 11
Distributions to noncontrolling interests — — — — — — — — (2) (2)
Net income — — — — — — 85 85 4 89
Balances at January 28, 2023 60.9 $ 1 1.3 $ (53) $ 592 $ (9) $ 1,311 $ 1,842 $ 3 $ 1,845
Balances at July 31, 2021 57.0 $ 1 0.6 $ (24) $ 599 $ (39) $ 978 $ 1,515 $ (1) $ 1,514
Restricted stock vestings 1.8 — — — (35) — — (35) — (35)
Share-based compensation — — — — 23 — — 23 — 23
Other comprehensive income — — — — — 30 — 30 — 30
Distributions to noncontrolling interests — — — — — — — — (3) (3)
Proceeds from issuance of common stock, net — — — — 9 — — 9 — 9
Net income — — — — — — 142 142 3 145
Balances at January 29, 2022 58.8 $ 1 0.6 $ (24) $ 596 $ (9) $ 1,120 $ 1,684 $ (1) $ 1,683

~~See accompanying Notes to Condensed Consolidated Financial Statements.~~

Table of Contents

UNITED NATURAL FOODS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)


		26-Week Period Ended					13-Week Period Ended
(in millions)	(in millions)	January 28, 2023		January 29, 2022		(in millions)	October 28, 2023		October 29, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:	CASH FLOWS FROM OPERATING ACTIVITIES:					CASH FLOWS FROM OPERATING ACTIVITIES:
Net income including noncontrolling interests		$	89	$	145
Adjustments to reconcile net income to net cash provided by operating activities:
Net (loss) income including noncontrolling interests						Net (loss) income including noncontrolling interests	$	(39)	$	67
Adjustments to reconcile net (loss) income to net cash used in operating activities:						Adjustments to reconcile net (loss) income to net cash used in operating activities:
Depreciation and amortization	Depreciation and amortization	147		138		Depreciation and amortization	78		74
Share-based compensation	Share-based compensation	23		23		Share-based compensation	6		12
(Gain) loss on sale of property and equipment		(9)		1
Closed property and other restructuring charges		—		1
Gain on sale of long-lived assets						Gain on sale of long-lived assets	(7)		(5)
Long-lived asset impairment charges						Long-lived asset impairment charges	21		—
Net pension and other postretirement benefit income	Net pension and other postretirement benefit income	(14)		(20)		Net pension and other postretirement benefit income	(3)		(7)
Deferred income tax expense	Deferred income tax expense	1		—		Deferred income tax expense	—		2
LIFO charge	LIFO charge	50		30		LIFO charge	7		21
Provision for losses on receivables		(3)		1

Non-cash interest expense and other adjustments	Non-cash interest expense and other adjustments	8		15		Non-cash interest expense and other adjustments	2		3
Changes in operating assets and liabilities	Changes in operating assets and liabilities	(22)		(291)		Changes in operating assets and liabilities	(319)		(429)
Net cash provided by operating activities		270		43
Net cash used in operating activities						Net cash used in operating activities	(254)		(262)
CASH FLOWS FROM INVESTING ACTIVITIES:	CASH FLOWS FROM INVESTING ACTIVITIES:					CASH FLOWS FROM INVESTING ACTIVITIES:
Payments for capital expenditures	Payments for capital expenditures	(151)		(106)		Payments for capital expenditures	(74)		(67)
Proceeds from dispositions of assets	Proceeds from dispositions of assets	12		3		Proceeds from dispositions of assets	9		7
Payments for investments	Payments for investments	(4)		(26)		Payments for investments	(7)		(1)
Net cash used in investing activities	Net cash used in investing activities	(143)		(129)		Net cash used in investing activities	(72)		(61)
CASH FLOWS FROM FINANCING ACTIVITIES:	CASH FLOWS FROM FINANCING ACTIVITIES:					CASH FLOWS FROM FINANCING ACTIVITIES:

Proceeds from borrowings under revolving credit line	Proceeds from borrowings under revolving credit line	1,944		2,521		Proceeds from borrowings under revolving credit line	597		1,206

Repayments of borrowings under revolving credit line	Repayments of borrowings under revolving credit line	(1,861)		(2,232)		Repayments of borrowings under revolving credit line	(257)		(829)
Repayments of long-term debt and finance leases	Repayments of long-term debt and finance leases	(143)		(168)		Repayments of long-term debt and finance leases	(6)		(6)
Repurchases of common stock	Repurchases of common stock	(29)		—		Repurchases of common stock	—		(12)
Proceeds from the issuance of common stock and exercise of stock options		—		9
Payments of employee restricted stock tax withholdings	Payments of employee restricted stock tax withholdings	(39)		(35)		Payments of employee restricted stock tax withholdings	(6)		(37)
Payments for debt issuance costs		—		(1)

Distributions to noncontrolling interests	Distributions to noncontrolling interests	(2)		(3)		Distributions to noncontrolling interests	(1)		(2)
Repayments of other loans	Repayments of other loans	(1)		—		Repayments of other loans	—		(1)

Net cash (used in) provided by financing activities		(131)		91
Other						Other	(1)		—
Net cash provided by financing activities						Net cash provided by financing activities	326		319
EFFECT OF EXCHANGE RATE ON CASH	EFFECT OF EXCHANGE RATE ON CASH	—		—		EFFECT OF EXCHANGE RATE ON CASH	—		(1)
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS		(4)		5
NET DECREASE IN CASH AND CASH EQUIVALENTS						NET DECREASE IN CASH AND CASH EQUIVALENTS	—		(5)
Cash and cash equivalents, at beginning of period	Cash and cash equivalents, at beginning of period	44		40		Cash and cash equivalents, at beginning of period	37		44
Cash and cash equivalents, at end of period	Cash and cash equivalents, at end of period	$	40	$	45	Cash and cash equivalents, at end of period	$	37	$	39
Supplemental disclosures of cash flow information:	Supplemental disclosures of cash flow information:					Supplemental disclosures of cash flow information:
Cash paid for interest	Cash paid for interest	$	65	$	67	Cash paid for interest	$	44	$	40
Cash payments for federal, state, and foreign income taxes, net		$	3	$	—
Cash (refunds) for federal, state, and foreign income taxes, net						Cash (refunds) for federal, state, and foreign income taxes, net	$	(12)	$	(1)
Leased assets obtained in exchange for new operating lease liabilities	Leased assets obtained in exchange for new operating lease liabilities	$	133	$	123	Leased assets obtained in exchange for new operating lease liabilities	$	39	$	57
Leased assets obtained in exchange for new finance lease liabilities		$	—	$	1
Additions of property and equipment included in Accounts payable	Additions of property and equipment included in Accounts payable	$	31	$	16	Additions of property and equipment included in Accounts payable	$	18	$	26

See accompanying Notes to Condensed Consolidated Financial Statements.

Table of Contents

UNITED NATURAL FOODS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (unaudited)

NOTE 1—SIGNIFICANT ACCOUNTING POLICIES

Nature of Business

United Natural Foods, Inc. and its subsidiaries (the “Company” or “UNFI”) is a leading distributor of natural, organic, specialty, produce and conventional grocery and non-food products, and provider of support services to retailers. The Company sells its products primarily throughout the United States and Canada.

Fiscal Year

The Company’s fiscal years end on the Saturday closest to July 31 and contain either 52 or 53 weeks. Fiscal 2024 will contain 53 weeks with the fourth quarter of fiscal 2024 containing 14 weeks. References to the ~~second~~first quarter of fiscal ~~2023~~2024 and ~~2022~~2023 relate to the 13-week fiscal quarters ended ~~January~~October 28, 2023 and ~~January 29, 2022, respectively. References to fiscal 2023 and 2022 year-to-date relate to the 26-week fiscal periods ended January 28, 2023 and January~~October 29, 2022, respectively.

Basis of Presentation

The accompanying unaudited Condensed Consolidated Financial Statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions and balances have been eliminated in consolidation.

The accompanying unaudited Condensed Consolidated Financial Statements have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial information, including the instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, certain information and note disclosures normally required in complete financial statements prepared in conformity with accounting principles generally accepted in the United States (“GAAP”) have been condensed or omitted. In the Company’s opinion, these Condensed Consolidated Financial Statements include all adjustments necessary for a fair presentation of the financial position, results of operations and cash flows for the interim periods presented. However, the results of operations for interim periods may not be indicative of the results that may be expected for a full year. These Condensed Consolidated Financial Statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in the Company’s Annual Report on Form 10-K for the fiscal year ended July ~~30, 2022~~29, 2023 (the “Annual Report”). There were no material changes in significant accounting policies from those described in the Annual Report.

Use of Estimates

The preparation of the Condensed Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Reclassifications

Within the Condensed Consolidated Financial Statements certain immaterial amounts have been reclassified to conform with current period presentation. These reclassifications had no impact on reported net income, cash flows, or total assets and liabilities.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid investments with original maturities of three months or less. The Company’s banking arrangements allow it to fund outstanding checks when presented to the financial institution for payment. The Company funds all intraday bank balance overdrafts during the same business day. Checks outstanding in excess of bank balances create book overdrafts, which are recorded in Accounts payable in the Condensed Consolidated Balance Sheets and are reflected as an operating activity in the Condensed Consolidated Statements of Cash Flows. As of ~~January~~October 28, 2023 and July ~~30, 2022,~~29, 2023, the Company had net book overdrafts of ~~$263~~$328 million and ~~$266~~$308 million, respectively.

~~Reclassifications~~

Table of Contents

Inventories, Net

Substantially all of the Company’s inventories consist of finished goods. To value discrete inventory items at lower of cost or net realizable value before application of any last-in, first-out (“LIFO”) reserve, the Company utilizes the weighted average cost method, perpetual cost method, the retail inventory method and the replacement cost method. Allowances for vendor funds and cash discounts received from suppliers are recorded as a reduction to Inventories, net and subsequently within Cost of sales upon the sale of the related products. Inventory quantities are evaluated throughout each fiscal year based on ~~actual~~ physical counts in the Company’s distribution facilities and stores. Allowances for inventory shortages are recorded based on the results of these ~~counts to provide for estimated variances as of the end of each fiscal year.~~counts. The LIFO reserve was approximately ~~$275~~$351 million and ~~$225~~$344 million as of ~~January~~October 28, 2023 and July ~~30, 2022,~~29, 2023, respectively, which is recorded within Inventories, net on the Condensed Consolidated Balance Sheets.

NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

Recently Issued Accounting Pronouncements

In June 2022, the ~~FASB~~Financial Accounting Standards Board (“FASB”) issued ASU 2022-03, Fair Value Measurement (Topic 820): Fair Value Measurement of Equity Securities Subject to Contractual Sale ~~Restrictions.~~Restrictions. ASU 2022-03 clarifies that a contractual restriction on the sale of an equity security is not part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. The amendments in this update also require additional disclosures for equity securities subject to contractual sale restrictions. The Company is required to adopt the amendments in this ~~guidance~~update in the first quarter of fiscal 2025. The Company is in the process of reviewing the provisions of the ~~new standard~~amendments in this update but does not expect the adoption to have a material impact on the Company’s consolidated financial statements.

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. ASU 2023-07 requires disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (“CODM”) and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items to reconcile to segment profit or loss, and the title and position of the entity’s CODM. The amendments in this update also expand the interim segment disclosure requirements. The Company is required to adopt the amendments in this update in fiscal 2025, and the interim disclosure requirements will be effective for the Company in the first quarter of fiscal 2026. Early adoption is permitted. The amendments in this update are required to be applied on a retrospective basis. The Company is currently reviewing the provisions of the amendments in this update and evaluating their impact on the Company's consolidated financial statements.

NOTE 3—REVENUE RECOGNITION

Disaggregation of Revenues

The Company records revenue to five customer channels within Net sales, which are described below:

•Chains, which consists of customer accounts that typically have more than 10 operating stores and excludes stores included within the Supernatural and Other channels defined below;

•Independent retailers, which includes smaller size accounts including single store and multiple store locations, and group purchasing entities that are not classified within Chains above or Other ~~discussed~~defined below;

•Supernatural, which consists of chain accounts that are national in scope and carry primarily natural products, and currently consists solely of one customer;

•Retail, which reflects the Company’s Retail segment, including ~~Cub~~Cub® Foods and ~~Shoppers stores,~~Shoppers® stores; and

•Other, which includes international customers outside of Canada, foodservice, eCommerce, conventional military business and other sales.

109

Table of Contents

The following tables detail the Company’s Net sales for the periods presented by customer channel for each of its segments. The Company does not record its revenues within its Wholesale reportable segment for financial reporting purposes by product group, and it is therefore impracticable for it to report them accordingly.


		Net Sales for the 13-Week Period Ended											Net Sales for the 13-Week Period Ended
(in millions)	(in millions)	January 28, 2023										(in millions)	October 28, 2023
Customer Channel	Customer Channel	Wholesale		Retail		Other		Eliminations(1)		Consolidated		Customer Channel	Wholesale		Retail		Other		Eliminations(1)		Consolidated
Chains	Chains	$	3,322	$	—	$	—	$	—	$	3,322	Chains	$	3,184	$	—	$	—	$	—	$	3,184
Independent retailers	Independent retailers	1,980		—		—		—		1,980		Independent retailers	1,899		—		—		—		1,899
Supernatural	Supernatural	1,659		—		—		—		1,659		Supernatural	1,612		—		—		—		1,612
Retail	Retail	—		660		—		—		660		Retail	—		606		—		—		606
Other	Other	553		—		56		—		609		Other	586		—		60		—		646
Eliminations	Eliminations	—		—		—		(414)		(414)		Eliminations	—		—		—		(395)		(395)
Total	Total	$	7,514	$	660	$	56	$	(414)	$	7,816	Total	$	7,281	$	606	$	60	$	(395)	$	7,552

		Net Sales for the 13-Week Period Ended											Net Sales for the 13-Week Period Ended
(in millions)	(in millions)	January 29, 2022										(in millions)	October 29, 2022
Customer Channel	Customer Channel	Wholesale		Retail		Other		Eliminations(1)		Consolidated		Customer Channel	Wholesale		Retail		Other		Eliminations(1)		Consolidated
Chains	Chains	$	3,243	$	—	$	—	$	—	$	3,243	Chains	$	3,224	$	—	$	—	$	—	$	3,224
Independent retailers	Independent retailers	1,905		—		—		—		1,905		Independent retailers	1,947		—		—		—		1,947
Supernatural	Supernatural	1,453		—		—		—		1,453		Supernatural	1,513		—		—		—		1,513
Retail	Retail	—		643		—		—		643		Retail	—		613		—		—		613
Other	Other	531		—		50		—		581		Other	575		—		60		—		635
Eliminations	Eliminations	—		—		—		(409)		(409)		Eliminations	—		—		—		(400)		(400)
Total	Total	$	7,132	$	643	$	50	$	(409)	$	7,416	Total	$	7,259	$	613	$	60	$	(400)	$	7,532

		Net Sales for the 26-Week Period Ended
(in millions)		January 28, 2023
Customer Channel		Wholesale		Retail		Other		Eliminations(1)		Consolidated
Chains		$	6,546	$	—	$	—	$	—	$	6,546
Independent retailers		3,927		—		—		—		3,927
Supernatural		3,172		—		—		—		3,172
Retail		—		1,273		—		—		1,273
Other		1,128		—		116		—		1,244
Eliminations		—		—		—		(814)		(814)
Total		$	14,773	$	1,273	$	116	$	(814)	$	15,348

		Net Sales for the 26-Week Period Ended
(in millions)		January 29, 2022
Customer Channel		Wholesale		Retail		Other		Eliminations(1)		Consolidated
Chains		$	6,325	$	—	$	—	$	—	$	6,325
Independent retailers		3,655		—		—		—		3,655
Supernatural		2,831		—		—		—		2,831
Retail		—		1,245		—		—		1,245
Other		1,055		—		106		—		1,161
Eliminations		—		—		—		(804)		(804)
Total		$	13,866	$	1,245	$	106	$	(804)	$	14,413

(1)Eliminations primarily includes the net sales elimination of Wholesale to Retail sales and the elimination of sales from segments included within Other to Wholesale.

~~Table of Contents~~

The Company serves customers in the United States and Canada, as well as customers located in other countries. However, all of the Company’s revenue is earned in the United States and Canada, and international distribution occurs through freight-forwarders. The Company does not have any performance obligations on international shipments subsequent to delivery to the domestic port.

Accounts and Notes Receivable Balances

Accounts and notes receivable are as follows:


(in millions)	(in millions)	January 28, 2023		July 30, 2022		(in millions)	October 28, 2023		July 29, 2023
Customer accounts receivable	Customer accounts receivable	$	989	$	1,213	Customer accounts receivable	$	1,004	$	887
Allowance for uncollectible receivables	Allowance for uncollectible receivables	(17)		(18)		Allowance for uncollectible receivables	(17)		(17)
Other receivables, net	Other receivables, net	20		19		Other receivables, net	26		19
Accounts receivable, net	Accounts receivable, net	$	992	$	1,214	Accounts receivable, net	$	1,013	$	889

Notes receivable, net, included within Prepaid expenses and other current assets	Notes receivable, net, included within Prepaid expenses and other current assets	$	5	$	6	Notes receivable, net, included within Prepaid expenses and other current assets	$	4	$	3
Long-term notes receivable, net, included within Other long-term assets	Long-term notes receivable, net, included within Other long-term assets	$	10	$	12	Long-term notes receivable, net, included within Other long-term assets	$	7	$	7

Table of Contents

During the ~~second quarter of fiscal 2023,~~prior year, the Company entered into an agreement to sell, on a ~~purchase agreement with a third-party financial institution for the sale of~~revolving basis, certain customer accounts receivable up to a ~~maximum outstanding amount of $300 million, without recourse, subject to eligibility criteria established by the~~third-party financial institution. Pursuant to the terms of the agreement, certain customer receivables are sold to the third-party financial institution on a revolving basis, subject to certain limitations. After these sales, the Company does not retain any interest in the receivables. The Company’s continuing involvement in transferred receivables is limited to servicing the receivables.

Accounts receivable that the Company is servicing on behalf of the financial institution, which would have otherwise been outstanding as of ~~January~~October 28, 2023 and July 29, 2023, was approximately ~~$292 million.~~$326 million and $310 million, respectively. Net proceeds received are included within ~~net~~ cash ~~provided by~~from operating activities in the Condensed Consolidated Statements of Cash Flows in the period of sale. The loss on sale of receivables was $5 million during the ~~second~~first quarter of fiscal ~~2023~~2024, and is recorded within Loss (gain) on sale of assets and other asset charges in the Condensed Consolidated Statements of Operations.

NOTE 4—PROPERTY AND EQUIPMENT, NET

In the first quarter of fiscal 2024, the Company determined that it was more likely than not that it would dispose of one of its corporate-owned office locations before the end of its previously estimated useful life. As a result, the Company conducted an impairment review and recorded a $21 million non-cash asset impairment charge in the first quarter of fiscal 2024. The fair value utilized in the Company’s impairment review was determined based on the market approach. The impairment charge is recorded within Loss (gain) on sale of assets and other asset charges in the Condensed Consolidated Statements of Operations. There were no asset impairment charges recorded in the first quarter of fiscal 2023.

NOTE 4—5—GOODWILL AND INTANGIBLE ASSETS, NET

Changes in the carrying value of Goodwill by reportable segment that have goodwill consisted of the following:


(in millions)	(in millions)	Wholesale			Other			Total		(in millions)	Wholesale			Other			Total
Goodwill as of July 30, 2022		$	10	(1)	$	10	(2)	$	20
Goodwill as of July 29, 2023										Goodwill as of July 29, 2023	$	10	(1)	$	10	(2)	$	20
Change in foreign exchange rates										Change in foreign exchange rates	(1)			—			(1)
Goodwill as of October 28, 2023										Goodwill as of October 28, 2023	$	9	(1)	$	10	(2)	$	19

Change in foreign exchange rates		—			—			—
Goodwill as of January 28, 2023		$	10	(1)	$	10	(2)	$	20

(1)Wholesale amounts are net of accumulated goodwill impairment charges of $717 million as of July ~~30, 2022~~29, 2023 and ~~January~~October 28, 2023.

(2)Other amounts are net of accumulated goodwill impairment charges of $10 million as of July ~~30, 2022~~29, 2023 and ~~January~~October 28, 2023.

Identifiable intangible assets, net consisted of the following:


	October 28, 2023						July 29, 2023
(in millions)	Gross Carrying Amount		Accumulated Amortization		Net		Gross Carrying Amount		Accumulated Amortization		Net
Amortizing intangible assets:
Customer relationships	$	1,007	$	368	$	639	$	1,007	$	354	$	653
Pharmacy prescription files	33		24		9		33		22		11
Operating lease intangibles	6		5		1		6		5		1
Trademarks and tradenames	88		59		29		89		57		32
Total amortizing intangible assets	1,134		456		678		1,135		438		697
Indefinite lived intangible assets:
Trademarks and tradenames	25		—		25		25		—		25
Intangibles assets, net	$	1,159	$	456	$	703	$	1,160	$	438	$	722

Table of Contents

~~Identifiable intangible assets, net consisted of the following:~~

January 28, 2023 July 30, 2022
(in millions) Gross Carrying
Amount Accumulated
Amortization Net Gross Carrying
Amount Accumulated
Amortization Net
Amortizing intangible assets:
Customer relationships $ 1,007 $ 324 $ 683 $ 1,007 $ 294 $ 713
Pharmacy prescription files 33 20 13 33 18 15
Operating lease intangibles 6 4 2 6 4 2
Trademarks and tradenames 84 55 29 84 51 33
Total amortizing intangible assets 1,130 403 727 1,130 367 763
Indefinite lived intangible assets:
Trademarks and tradenames 56 — 56 56 — 56
Intangibles assets, net $ 1,186 $ 403 $ 783 $ 1,186 $ 367 $ 819

Amortization expense was $18 million ~~and $18 million~~ for the ~~second~~first quarters of fiscal ~~2023~~2024 and ~~2022, respectively, and $36 million and $36 million for fiscal 2023 and 2022 year-to-date, respectively.~~2023. The estimated future amortization expense for each of the next five fiscal years and thereafter on amortizing intangible assets existing as of ~~January~~October 28, 2023 is as shown below:


Fiscal Year:	Fiscal Year:	(in millions)		Fiscal Year:	(in millions)
Remaining fiscal 2023		$	36
2024		72
Remaining fiscal 2024				Remaining fiscal 2024	$	55
2025	2025	70		2025	71
2026	2026	66		2026	67
2027	2027	63		2027	64
2028				2028	61
Thereafter	Thereafter	420		Thereafter	360
		$	727		$	678

NOTE 5—6—FAIR VALUE MEASUREMENTS OF FINANCIAL INSTRUMENTS

Recurring Fair Value Measurements

The following tables provide the fair value hierarchy for financial assets and liabilities measured on a recurring basis:


	Condensed Consolidated Balance Sheets Location	Fair Value at ~~January~~October 28, 2023
(in millions)		Level 1		Level 2		Level 3
Assets:
Fuel derivatives designated as hedging instruments	Prepaid expenses and other current assets	$	—	$	1	$	—
Foreign currency derivatives designated as hedging instruments	Prepaid expenses and other current assets	$	—	$	1	$	—
Interest rate swaps designated as hedging instruments	Prepaid expenses and other current assets	$	—	$	15	$	—
Interest rate swaps designated as hedging instruments	Other long-term assets	$	—	$	4	$	—


	Condensed Consolidated Balance Sheets Location	Fair Value at July 29, 2023
(in millions)		Level 1		Level 2		Level 3
Assets:
Interest rate swaps designated as hedging instruments	Prepaid expenses and other current assets	$	—	$	17	$	—
Interest rate swaps designated as hedging instruments	Other long-term assets	$	—	$	5	$	—

Liabilities:
Fuel derivatives designated as hedging instruments	Accrued expenses and other current liabilities	$	—	$	1	$	—

~~Table of Contents~~


	~~Condensed Consolidated Balance Sheets Location~~	~~Fair Value at July 30, 2022~~
~~(in millions)~~		~~Level 1~~		~~Level 2~~		~~Level 3~~
~~Assets:~~
~~Fuel derivatives designated as hedging instruments~~	~~Prepaid expenses and other current assets~~	$	—	$	3	$	—
~~Interest rate swaps designated as hedging instruments~~	~~Prepaid expenses and other current assets~~	$	—	$	3	$	—
~~Interest rate swaps designated as hedging instruments~~	~~Other long-term assets~~	$	—	$	1	$	—

~~Liabilities:~~
~~Interest rate swaps designated as hedging instruments~~	~~Other long-term liabilities~~	$	—	$	2	$	—

Interest Rate Swap Contracts

The fair values of interest rate swap contracts are measured using Level 2 inputs. The interest rate swap contracts are valued using an income approach interest rate swap valuation model incorporating observable market inputs including interest rates, SOFR swap rates and credit default swap rates. As of ~~January~~October 28, 2023, a 100-basis point increase in forward SOFR interest rates would increase the fair value of the interest rate swaps by approximately ~~$12~~$6 million; a 100-basis point decrease in forward SOFR interest rates would decrease the fair value of the interest rate swaps by approximately ~~$12~~$6 million. Refer to Note 6—7—Derivatives for further information on interest rate swap contracts.

Table of Contents

Fair Value Estimates

For certain of the Company’s financial instruments including cash and cash equivalents, receivables, accounts payable, accrued vacation, compensation and benefits, and other current assets and liabilities the fair values approximate carrying amounts due to their short maturities. The fair value of notes receivable is estimated by using a discounted cash flow approach prior to consideration for uncollectible amounts and is calculated by applying a market rate for similar instruments using Level 3 inputs. The fair value of debt is estimated based on market quotes, where available, or market values for similar instruments, using Level 2 and 3 inputs. In the table below, the carrying value of the Company’s long-term debt is net of original issue discounts and debt issuance costs.


		January 28, 2023				July 30, 2022					October 28, 2023				July 29, 2023
(in millions)	(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value		(in millions)	Carrying Value		Fair Value		Carrying Value		Fair Value
Notes receivable, including current portion	Notes receivable, including current portion	$	20	$	14	$	23	$	17	Notes receivable, including current portion	$	15	$	9	$	15	$	8
Long-term debt, including current portion	Long-term debt, including current portion	$	2,077	$	2,091	$	2,123	$	2,153	Long-term debt, including current portion	$	2,301	$	2,214	$	1,963	$	1,903

NOTE 6—7—DERIVATIVES

Management of Interest Rate Risk

The Company enters into interest rate swap contracts from time to time to mitigate its exposure to changes in market interest rates as part of its overall strategy to manage its debt portfolio to achieve an overall desired position of notional debt amounts subject to fixed and floating interest rates. Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures. The Company’s interest rate swap contracts are designated as cash flow hedges as of ~~January~~October 28, 2023. Interest rate swap contracts are reflected at their fair values in the Condensed Consolidated Balance Sheets. Refer to Note 5—6—Fair Value Measurements of Financial Instruments for further information on the fair value of interest rate swap contracts.

~~Table of Contents~~

Details of active swap contracts as of ~~January~~October 28, 2023, which are all pay fixed and receive floating, are as follows:

Effective Date

Swap Maturity

Notional Value (in millions)

Pay Fixed Rate

Receive Floating Rate

Floating Rate Reset Terms

Effective Date

Swap Maturity

Notional Value (in millions)

Pay Fixed Rate

Receive Floating Rate

Floating Rate Reset Terms

November 16, 2018

March 31, 2023

150

2.7770

One-Month Term SOFR

Monthly

January 23, 2019

March 31, 2023

2.4245

One-Month Term SOFR

Monthly

November 30, 2018

September 30, 2023

2.6980

One-Month Term SOFR

Monthly

October 26, 2018

October 31, 2023

100

2.7880

One-Month Term SOFR

Monthly

October 26, 2018

October 31, 2023

100

2.7880

One-Month Term SOFR

Monthly

January 11, 2019

March 28, 2024

100

2.3600

One-Month Term SOFR

Monthly

January 11, 2019

March 28, 2024

100

2.3600

One-Month Term SOFR

Monthly

January 23, 2019

March 28, 2024

100

2.4250

One-Month Term SOFR

Monthly

January 23, 2019

March 28, 2024

100

2.4250

One-Month Term SOFR

Monthly

November 30, 2018

October 31, 2024

100

2.7385

One-Month Term SOFR

Monthly

November 30, 2018

October 31, 2024

100

2.7385

One-Month Term SOFR

Monthly

January 11, 2019

October 31, 2024

100

2.4025

One-Month Term SOFR

Monthly

January 11, 2019

October 31, 2024

100

2.4025

One-Month Term SOFR

Monthly

January 24, 2019

October 31, 2024

2.4090

One-Month Term SOFR

Monthly

January 24, 2019

October 31, 2024

2.4090

One-Month Term SOFR

Monthly

October 26, 2018

October 22, 2025

2.8725

One-Month Term SOFR

Monthly

October 26, 2018

October 22, 2025

2.8725

One-Month Term SOFR

Monthly

November 16, 2018

October 22, 2025

2.8750

One-Month Term SOFR

Monthly

November 16, 2018

October 22, 2025

2.8750

One-Month Term SOFR

Monthly

November 16, 2018

October 22, 2025

2.8380

One-Month Term SOFR

Monthly

November 16, 2018

October 22, 2025

2.8380

One-Month Term SOFR

Monthly

January 24, 2019

October 22, 2025

2.4750

One-Month Term SOFR

Monthly

January 24, 2019

October 22, 2025

2.4750

One-Month Term SOFR

Monthly

1,000

750

The Company performs an initial quantitative assessment of hedge effectiveness using the “Hypothetical Derivative Method” in the period in which the hedging transaction is entered. Under this method, the Company assesses the effectiveness of each hedging relationship by comparing the changes in cash flows of the derivative hedging instrument with the changes in cash flows of the designated hedged transactions. In future reporting periods, the Company performs a qualitative analysis for quarterly prospective and retrospective assessments of hedge effectiveness. The Company also monitors the risk of counterparty default on an ongoing basis and noted that the counterparties are reputable financial institutions. The entire change in the fair value of the derivative is initially reported in Other comprehensive income (outside of earnings) in the Condensed Consolidated Statements of Comprehensive (Loss) Income and subsequently reclassified to earnings in Interest expense, net in the Condensed Consolidated Statements of Operations when the hedged transactions affect earnings.

Table of Contents

The location and amount of gains or losses recognized in the Condensed Consolidated Statements of Operations for interest rate swap contracts for each of the periods, presented on a pre-tax basis, are as follows:


		13-Week Period Ended				26-Week Period Ended					13-Week Period Ended
		January 28, 2023		January 29, 2022		January 28, 2023		January 29, 2022				October 28, 2023		October 29, 2022
(in millions)	(in millions)	Interest expense, net				Interest expense, net				(in millions)	Interest expense, net
Total amounts of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded	Total amounts of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded	$	39	$	44	$	74	$	84	Total amounts of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded		$	35	$	35
Loss on cash flow hedging relationships:
Loss reclassified from comprehensive income into earnings		$	4	$	(10)	$	4	$	(21)
Gain on cash flow hedging relationships:										Gain on cash flow hedging relationships:
Gain reclassified from comprehensive income into earnings										Gain reclassified from comprehensive income into earnings		$	5	$	—

~~Table of Contents~~

NOTE 7—8—LONG-TERM DEBT

The Company’s long-term debt consisted of the following:


(in millions)	(in millions)	Average Interest Rate at January 28, 2023	Fiscal Maturity Year	January 28, 2023		July 30, 2022		(in millions)	Average Interest Rate at October 28, 2023	Fiscal Maturity Year	October 28, 2023		July 29, 2023
Term Loan Facility	Term Loan Facility	7.69%	2026	$	670	$	800	Term Loan Facility	8.68%	2026	$	670	$	670
ABL Credit Facility	ABL Credit Facility	5.46%	2027	923		840		ABL Credit Facility	6.78%	2027	1,152		812
Senior Notes	Senior Notes	6.75%	2029	500		500		Senior Notes	6.75%	2029	500		500
Other secured loans	Other secured loans	5.01%	2024-2025	16		23		Other secured loans	4.43%	2025	5		9
Debt issuance costs, net	Debt issuance costs, net			(25)		(29)		Debt issuance costs, net			(20)		(22)
Original issue discount on debt	Original issue discount on debt			(7)		(11)		Original issue discount on debt			(6)		(6)
Long-term debt, including current portion	Long-term debt, including current portion			2,077		2,123		Long-term debt, including current portion			2,301		1,963
Less: current portion of long-term debt	Less: current portion of long-term debt			(12)		(14)		Less: current portion of long-term debt			(5)		(7)
Long-term debt	Long-term debt			$	2,065	$	2,109	Long-term debt			$	2,296	$	1,956

Senior Notes

On October 22, 2020, the Company issued $500 million of unsecured 6.750% senior notes due October 15, 2028 (the “Senior Notes”). The Senior Notes, which are presented net of debt issuance costs of $7$6 million as of ~~January~~October 28, 2023 ~~and July 30, 2022~~ in the Condensed Consolidated Balance Sheets, are guaranteed by each of the Company’s subsidiaries that are borrowers under or that guarantee the ABL Credit Facility or the Term Loan Facility (defined below).

ABL Credit Facility

The revolving credit agreement dated as of June 3, 2022 (the “ABL Loan Agreement”), by and among the Company (the “U.S. Borrower”), and UNFI Canada (the “Canadian Borrower” and, together with the U.S. Borrower, the “Borrowers”), and the financial institutions that are parties thereto as lenders (collectively, the “ABL Lenders”), Wells Fargo Bank, N.A. as administrative agent for the ABL Lenders, and the other parties thereto, provides for a secured asset-based revolving credit facility (the “ABL Credit Facility”), of which up to $2,600 million is available to the Borrowers, including a U.S. Dollar equivalent of $100 million sublimit for borrowings in Canadian dollars. Under the ABL Loan Agreement, the Borrowers may, at their option, increase the aggregate amount of the ABL Credit Facility in an amount of up to $750 million without the consent of any ABL Lenders not participating in such increase, subject to certain customary conditions and applicable lenders committing to provide the increase in funding. There is no assurance that additional funding would be available.

The Borrowers’ obligations under the ABL Credit Facility are guaranteed by most of the Company’s ~~wholly owned~~wholly-owned subsidiaries (collectively, the “Guarantors”), subject to customary exceptions and limitations. The Borrowers’ obligations under the ABL Credit Facility and the Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on certain accounts receivable, ~~certain~~ inventory and certain other assets arising therefrom or related thereto of the Borrowers and Guarantors (including substantially all of their deposit accounts, collectively, the “ABL Assets”) and (ii) a second-priority lien on all of the Borrowers’ and Guarantors’ assets that do not constitute ABL Assets, in each case, subject to customary exceptions and limitations.

Table of Contents

Availability under the ABL Credit Facility is subject to a borrowing base (the “Borrowing Base”), which is based on 90% of eligible accounts receivable, plus 90% of eligible credit card receivables, plus 90% to 92.5% of the net orderly liquidation value of eligible inventory, plus 90% of eligible pharmacy receivables, plus certain availability related to pharmacy prescription files, ~~availability to the Borrowers,~~ after adjusting for customary reserves, but at no time shall exceed the lesser of the aggregate commitments under the ABL Credit Facility (currently $2,600 million) or the Borrowing Base.

~~Table of Contents~~

The assets included in the Condensed Consolidated Balance Sheets securing the outstanding obligations under the ABL Credit Facility on a first-priority basis ~~and the unused credit and fees under the ABL Credit Facility,~~ were as follows:


Assets securing the ABL Credit Facility (in millions):		January 28, 2023		July 30, 2022
(in millions)						(in millions)	October 28, 2023		July 29, 2023
Certain inventory assets included in Inventories, net	Certain inventory assets included in Inventories, net	$	1,950	$	1,789	Certain inventory assets included in Inventories, net	$	2,173	$	1,861
Certain receivables included in Accounts receivable, net	Certain receivables included in Accounts receivable, net	667		878		Certain receivables included in Accounts receivable, net	624		571
Pharmacy prescription files included in Intangible assets, net	Pharmacy prescription files included in Intangible assets, net	13		15		Pharmacy prescription files included in Intangible assets, net	9		11
Total	Total	$	2,630	$	2,682	Total	$	2,806	$	2,443

As of ~~January~~October 28, 2023, the Borrowers’ Borrowing Base ~~net of $95~~was $2,550 million, reflecting the advance rates described above and $101 million of reserves, ~~was $2,740 million,~~ which is ~~above~~below the $2,600 million limit of ~~availability, resulting~~availability. This resulted in total availability of ~~$2,600~~$2,550 million for loans and letters of credit under the ABL Credit Facility. As of January 28, 2023, the Borrowers had $923 million of loans outstanding under the ABL Credit Facility, which are presented net of debt issuance costs of $9 million and are included in Long-term debt in the Condensed Consolidated Balance Sheets. As of January 28, 2023, the U.S. Borrowers had $144 million in letters of credit outstanding under the ABL Credit Facility. The Company’s ~~resulting remaining availability~~unused credit under the ABL Credit Facility was ~~$1,533 million~~ as ~~of January 28, 2023.~~follows:


~~Availability under the ABL Credit Facility (in~~(in millions):	~~January~~October 28, 2023
Total availability for ABL loans and letters of credit	$	~~2,600~~2,550
ABL loans outstanding	$		~~923~~ (1,152)
Letters of credit outstanding	$		~~144~~ (150)
Unused credit	$	~~1,533~~1,248

The applicable interest rates, unutilized commitment fees and letter of credit fees under the ABL Credit Facility are variable and are dependent upon the prior fiscal quarter’s daily Average Availability (as defined in the ABL Loan Agreement), and were as follows:


Interest rates and fees under the ABL Credit Facility:		Range of Facility Rates and Fees (per annum)	January 28, 2023
						Range of Facility Rates and Fees (per annum)	October 28, 2023
Borrowers’ applicable margin for base rate loans	Borrowers’ applicable margin for base rate loans	0.00% - 0.25%	0.00	%	Borrowers’ applicable margin for base rate loans	0.00% - 0.25%	0.00	%
Borrowers’ applicable margin for SOFR and BA loans(1)	Borrowers’ applicable margin for SOFR and BA loans(1)	1.00% - 1.25%	1.00	%	Borrowers’ applicable margin for SOFR and BA loans(1)	1.00% - 1.25%	1.00	%
Unutilized commitment fees	Unutilized commitment fees	0.20%	0.20	%	Unutilized commitment fees	0.20%	0.20	%
Letter of credit fees	Letter of credit fees	1.125% - 1.375%	1.125	%	Letter of credit fees	1.125% - 1.375%	1.125	%

(1) The U.S. Borrower utilizes SOFR-based loans and the Canadian Borrower utilizes bankers’ acceptance rate-based loans.

Term Loan Facility

The term loan agreement dated as of October 22, 2018 (as amended, the “Term Loan Agreement”), by and among the Company and SUPERVALU INC. (“Supervalu” and, collectively with the Company, the “Term Borrowers”), the financial institutions that are parties thereto as lenders (collectively, the “Term Lenders”), Credit Suisse, as administrative agent for the Term Lenders, and the other parties thereto, provides for a $1,800 million senior secured first lien term ~~loans in an initial aggregate principal amount of $1,950 million, consisting of a $1,800 million seven-year tranche and a $150 million 364-day tranche that was repaid in fiscal 2020~~loan (the “Term Loan Facility”). The net proceeds from the Term Loan Facility were used to finance the Supervalu acquisition and related transaction costs. Any amounts then outstanding will be payable in full on October 22, 2025.

The obligations under the Term Loan Facility are guaranteed by the Guarantors, subject to customary exceptions and limitations. The Term Borrowers’ obligations under the Term Loan Facility and the Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on substantially all of the Term Borrowers’ and the Guarantors’ assets other than the ABL Assets and (ii) a second-priority lien on substantially all of the Term Borrowers’ and the Guarantors’ ABL Assets, in each case, subject to customary exceptions and limitations, including an exception for owned real property with net book values of less than $10 million. As of ~~January~~October 28, 2023 and July ~~30, 2022,~~29, 2023, there was ~~$618~~$612 million and ~~$629~~$617 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the Condensed Consolidated Balance Sheets.

1715

Table of Contents

The Company must prepay loans outstanding under the Term Loan Facility no later than 130 days after the fiscal year end in an aggregate principal amount equal to a specified percentage (which percentage ranges from 0 to 75 percent depending on the Consolidated First Lien Net Leverage Ratio as of the last day of such fiscal year) of Excess Cash Flow (as defined in the Term Loan Agreement), minus certain types of voluntary prepayments of indebtedness made during such fiscal year. AsThe potential amount of ~~January 28, 2023, there is no~~prepayment from Excess Cash Flow ~~payment expected to~~in fiscal 2024 that may be required in fiscal ~~2024.~~2025 is not reasonably estimable as

of October 28, 2023.

As of ~~January~~October 28, 2023, the Company had borrowings of $670 million outstanding under the Term Loan Facility, which are presented in the Condensed Consolidated Balance Sheets net of debt issuance costs of $9$7 million and an original issue discount on debt of $7$6 million. As of ~~January~~October 28, 2023, no amount of the Term Loan Facility was classified as current.

~~In the second quarter~~As of ~~fiscal~~October 28, 2023, the ~~Company made a $125 million voluntary prepayment on~~borrowings under the Term Loan Facility with a portion of the proceeds received from monetizing certain receivables within Accounts receivable, net associated with the Company’s purchase agreement with a third-party financial institution as previously discussed within Note 3—Revenue Recognition. This voluntary prepayment will count towards any requirement to prepaybear interest at rates that, at the Term ~~Loan Facility from Excess Cash Flow (as defined in~~Borrowers’ option, can be either: (i) a base rate plus a margin of 2.25% or (ii) a SOFR rate plus a margin of 3.25%, provided that the ~~Term Loan Agreement) generated during fiscal 2023, which would~~SOFR rate shall never be ~~due in fiscal 2024.~~less than 0.0%.

NOTE 8—9—COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS

Changes in Accumulated other comprehensive loss by component, net of tax, for the first quarter of fiscal ~~2023 year-to-date~~2024 were as follows:

(in millions) Other Cash Flow Derivatives Benefit Plans Foreign Currency Translation Swap Agreements Total
Accumulated other comprehensive income (loss) at July 30, 2022 $ 2 $ (3) $ (19) $ — $ (20)
Other comprehensive (loss) income before reclassifications (3) — (2) 17 12
Amortization of amounts included in net periodic benefit income — 1 — — 1
Amortization of cash flow hedges 1 — — (3) (2)
Net current period Other comprehensive (loss) income (2) 1 (2) 14 11
Accumulated other comprehensive income (loss) at January 28, 2023 $ — $ (2) $ (21) $ 14 $ (9)


(in millions)	Other Cash Flow Derivatives		Benefit Plans		Foreign Currency Translation		Swap Agreements		Total
Accumulated other comprehensive (loss) income at July 29, 2023	$	—	$	(21)	$	(21)	$	14	$	(28)
Other comprehensive income (loss) before reclassifications	1		—		(3)		1		(1)

Amortization of cash flow hedges	—		—		—		(4)		(4)
Net current period Other comprehensive income (loss)	1		—		(3)		(3)		(5)
Accumulated other comprehensive income (loss) at October 28, 2023	$	1	$	(21)	$	(24)	$	11	$	(33)

Changes in Accumulated other comprehensive loss by component, net of tax, for the first quarter of fiscal ~~2022 year-to-date~~2023 were as follows:

(in millions) Other Cash Flow Derivatives Benefit Plans Foreign Currency Translation Swap Agreements Total
Accumulated other comprehensive income (loss) at July 31, 2021 $ — $ 37 $ (16) $ (60) $ (39)
Other comprehensive income (loss) before reclassifications 1 — (2) 13 12
Amortization of amounts included in net periodic benefit income — 2 — — 2
Amortization of cash flow hedges 1 — — 15 16
Net current period Other comprehensive income (loss) 2 2 (2) 28 30
Accumulated other comprehensive income (loss) at January 29, 2022 $ 2 $ 39 $ (18) $ (32) $ (9)


(in millions)	Other Cash Flow Derivatives		Benefit Plans		Foreign Currency Translation		Swap Agreements		Total
Accumulated other comprehensive income (loss) at July 30, 2022	$	2	$	(3)	$	(19)	$	—	$	(20)
Other comprehensive (loss) income before reclassifications	(1)		—		(3)		18		14
Amortization of cash flow hedges	1		—		—		—		1
Net current period Other comprehensive (loss) income	—		—		(3)		18		15
Accumulated other comprehensive income (loss) at October 29, 2022	$	2	$	(3)	$	(22)	$	18	$	(5)

1816

Table of Contents

Items reclassified out of Accumulated other comprehensive loss had the following impact on the Condensed Consolidated Statements of Operations:

13-Week Period Ended 26-Week Period Ended Affected Line Item on the Condensed Consolidated Statements of Operations
(in millions) January 28,
2023 January 29,
2022 January 28,
2023 January 29,
2022
Pension and postretirement benefit plan net assets:
Amortization of amounts included in net periodic benefit income(1)
$ 1 $ 1 $ 1 $ 2 Net periodic benefit income, excluding service cost
Income tax benefit — — — — Provision for income taxes
Total reclassifications, net of tax $ 1 $ 1 $ 1 $ 2
Swap agreements:
Reclassification of cash flow hedges $ (4) $ 10 $ (4) $ 21 Interest expense, net
Income tax expense (benefit) 1 (3) 1 (6) Provision for income taxes
Total reclassifications, net of tax $ (3) $ 7 $ (3) $ 15
Other cash flow hedges:
Reclassification of cash flow hedge $ 1 $ 2 $ 2 $ 2 Cost of sales
Income tax benefit (1) (1) (1) (1) Provision for income taxes
Total reclassifications, net of tax $ — $ 1 $ 1 $ 1

~~(1)Reclassification of amounts included in net periodic benefit income include reclassification of prior service cost and reclassification of net actuarial loss as reflected in Note 10—Benefit Plans.~~


	13-Week Period Ended			Affected Line Item on the Condensed Consolidated Statements of Operations
(in millions)		October 28, 2023				October 29, 2022





Swap agreements:
Reclassification of cash flow hedges		$	(5)	$	—		Interest expense, net
Income tax expense (benefit)		1		—			(Benefit) provision for income taxes
Total reclassifications, net of tax		$	(4)	$	—

Other cash flow hedges:
Reclassification of cash flow hedge		$	—	$	1		Cost of sales
Income tax expense (benefit)		—		—			(Benefit) provision for income taxes
Total reclassifications, net of tax		$	—	$	1

As of ~~January~~October 28, 2023, the Company expects to reclassify ~~$16~~$15 million related to unrealized derivative gains ~~on interest rate swap hedges~~ out of Accumulated other comprehensive loss and primarily into Interest expense, net during the following twelve-month period.

NOTE 9—10—SHARE-BASED AWARDS

In fiscal 2023 year-to-date, the Company granted restricted stock units and performance share units to its directors, executive officers and certain employees representing a right to receive an aggregate of 1.6 million shares. As of ~~January~~October 28, 2023, there were ~~1.6~~2.2 million shares available for issuance under the Second Amended and Restated 2020 Equity Incentive Plan.

NOTE ~~10—~~11—BENEFIT PLANS

Net periodic benefit ~~income~~(income) cost and contributions to defined benefit pension and other postretirement benefit plans consisted of the following:

13-Week Period Ended
Pension Benefits Other Postretirement Benefits
(in millions) January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022
Net Periodic Benefit (Income) Cost
Interest cost $ 15 $ 9 $ — $ —
Expected return on plan assets (23) (20) — —
Amortization of prior service cost — — 1 1
Net periodic benefit (income) cost $ (8) $ (11) $ 1 $ 1
Contributions to benefit plans $ — $ — $ — $ (1)

~~Table of Contents~~


		26-Week Period Ended									13-Week Period Ended
		Pension Benefits				Other Postretirement Benefits					Pension Benefits				Other Postretirement Benefits
(in millions)	(in millions)	January 28, 2023		January 29, 2022		January 28, 2023		January 29, 2022		(in millions)	October 28, 2023		October 29, 2022		October 28, 2023		October 29, 2022
Net Periodic Benefit (Income) Cost
Interest cost	Interest cost	$	32	$	19	$	—	$	—	Interest cost	$	19	$	17	$	—	$	—
Expected return on plan assets	Expected return on plan assets	(47)		(41)		—		—		Expected return on plan assets	(22)		(24)		—		—
Amortization of prior service cost		—		—		1		2
Net periodic benefit (income) cost		$	(15)	$	(22)	$	1	$	2

Net periodic benefit income										Net periodic benefit income	$	(3)	$	(7)	$	—	$	—

Contributions to benefit plans	Contributions to benefit plans	$	—	$	—	$	—	$	(2)	Contributions to benefit plans	$	—	$	—	$	—	$	—

Contributions

No minimum pension contributions are required to be made ~~under~~to the SUPERVALU INC. Retirement Plan under the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”) in fiscal ~~2023.~~2024. The Company expects to contribute approximately $1 million to its other defined benefit pension plans and $1 million to its postretirement benefit plans in fiscal ~~2023.~~2024.

Multiemployer Pension Plans

The Company contributed ~~$12~~$13 million and $11 million in the ~~second~~first quarters of fiscal ~~2023~~2024 and ~~2022, respectively, and $23 million and $22 million in fiscal~~ 2023, ~~and 2022 year-to-date,~~ respectively, to multiemployer pension plans, which contributions are included within Operating expenses.

Table of Contents

NOTE ~~11—~~12—INCOME TAXES

The effective tax rate for the ~~second~~first quarter of fiscal 2024 was a benefit rate of 18.8% on pre-tax loss compared to an expense rate of 6.9% on pre-tax income for the first quarter of fiscal 2023. The change from the first quarter of fiscal 2023 ~~was 29.0% compared to 26.9% for the second quarter of fiscal 2022. The change was~~is primarily driven ~~primarily~~ by the reduction ~~in pre-tax income during the second quarter of fiscal 2023.~~

The effective tax rate for fiscal 2023 year-to-date was 13.6% compared to 14.2% for fiscal 2022 year-to-date. The effective tax rate for both fiscal 2023 and fiscal 2022 year-to-date was reduced by the impact of discrete tax benefits related to ~~the vesting of~~ employee stock ~~awards.~~award vestings in the first quarter of fiscal 2024. In addition, the first quarter of fiscal 2023 included a tax benefit from the release of reserves for unrecognized tax positions that did not recur in the first quarter of fiscal 2024. The primary driver for the variation between the Company’s statutory tax rate and its effective tax rate for the first quarters of fiscal 2024 and fiscal 2023 were discrete tax detriments and benefits, respectively, resulting from share award vestings.

NOTE ~~12—~~13—EARNINGS PER SHARE

The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share:


		13-Week Period Ended				26-Week Period Ended					13-Week Period Ended
(in millions, except per share data)	(in millions, except per share data)	January 28, 2023		January 29, 2022		January 28, 2023		January 29, 2022		(in millions, except per share data)		October 28, 2023		October 29, 2022
Basic weighted average shares outstanding	Basic weighted average shares outstanding	59.8		58.3		59.3		57.6		Basic weighted average shares outstanding		58.7		58.8
Net effect of dilutive stock awards based upon the treasury stock method	Net effect of dilutive stock awards based upon the treasury stock method	1.2		2.7		2.0		3.4		Net effect of dilutive stock awards based upon the treasury stock method		—		2.8
Diluted weighted average shares outstanding	Diluted weighted average shares outstanding	61.0		61.0		61.3		61.0		Diluted weighted average shares outstanding		58.7		61.6

Basic earnings per share(1)		$	0.32	$	1.13	$	1.43	$	2.47
Diluted earnings per share(1)		$	0.31	$	1.08	$	1.38	$	2.33
Basic (loss) earnings per share(1)										Basic (loss) earnings per share(1)		$	(0.67)	$	1.12
Diluted (loss) earnings per share(1)										Diluted (loss) earnings per share(1)		$	(0.67)	$	1.07

Anti-dilutive share-based awards excluded from the calculation of diluted earnings per share		0.8		0.4		0.8		0.9
Anti-dilutive share-based awards excluded from the calculation of diluted (loss) earnings per share										Anti-dilutive share-based awards excluded from the calculation of diluted (loss) earnings per share		2.3		0.9

(1)~~Earnings~~(Loss) earnings per share amounts are calculated using actual unrounded figures.

~~Table of Contents~~

NOTE ~~13—~~14—BUSINESS SEGMENTS

The Company has two reportable segments: Wholesale and Retail. These reportable segments are two distinct businesses, each with a different customer base, marketing strategy and management structure. The Company organizes and operates the Wholesale reportable segment through ~~four~~three U.S geographic regions: ~~Atlantic; South; Central;~~East, Central and ~~Pacific;~~West, and Canada Wholesale, which is operated separately from the U.S. Wholesale business. The U.S. Wholesale and Canada Wholesale operating segments have similar products and services, customer channels, distribution methods and economic characteristics, and therefore have been aggregated into a single reportable segment. Reportable segments are reviewed on an annual basis, or more frequently if events or circumstances indicate a change in reportable segments has occurred.

In fiscal 2022, the Company changed its measure of segment profit to exclude the impact of the non-cash LIFO charge or benefit from Adjusted EBITDA. Prior period Adjusted EBITDA amounts and the reconciliation to Income before income taxes have been recast to reflect this change in the measure of segment profit.

2118

Table of Contents

The following table provides ~~Net sales and Adjusted EBITDA~~information by reportable segment, ~~and reconciles that information to consolidated~~including Net sales, ~~and Income~~Adjusted EBITDA, with a reconciliation to (Loss) income before income taxes, ~~respectively:~~depreciation and amortization, and payments for capital expenditures:


		13-Week Period Ended				26-Week Period Ended					13-Week Period Ended
(in millions)	(in millions)	January 28, 2023		January 29, 2022		January 28, 2023		January 29, 2022		(in millions)		October 28, 2023		October 29, 2022
Net sales:	Net sales:									Net sales:
Wholesale(1)	Wholesale(1)	$	7,514	$	7,132	$	14,773	$	13,866	Wholesale(1)		$	7,281	$	7,259
Retail	Retail	660		643		1,273		1,245		Retail		606		613
Other	Other	56		50		116		106		Other		60		60
Eliminations	Eliminations	(414)		(409)		(814)		(804)		Eliminations		(395)		(400)
Total Net sales	Total Net sales	$	7,816	$	7,416	$	15,348	$	14,413	Total Net sales		$	7,552	$	7,532
Adjusted EBITDA:	Adjusted EBITDA:									Adjusted EBITDA:
Wholesale(2)		$	137	$	176	$	308	$	351
Retail(2)		28		32		48		54
Wholesale										Wholesale		$	117	$	171
Retail										Retail		(1)		20
Other	Other	15		12		34		16		Other		3		19
Eliminations	Eliminations	1		—		(2)		(1)		Eliminations		(2)		(3)
Adjustments:	Adjustments:									Adjustments:
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	3		2		4		3		Net income attributable to noncontrolling interests		—		1
Net periodic benefit income, excluding service cost	Net periodic benefit income, excluding service cost	7		10		14		20		Net periodic benefit income, excluding service cost		3		7
Interest expense, net	Interest expense, net	(39)		(44)		(74)		(84)		Interest expense, net		(35)		(35)
Other income, net	Other income, net	—		2		1		1		Other income, net		—		1
Depreciation and amortization	Depreciation and amortization	(73)		(69)		(147)		(138)		Depreciation and amortization		(78)		(74)
Share-based compensation	Share-based compensation	(11)		(12)		(23)		(23)		Share-based compensation		(6)		(12)
LIFO charge~~(2)~~	LIFO charge~~(2)~~	(29)		(19)		(50)		(30)		LIFO charge~~(2)~~		(7)		(21)
Restructuring, acquisition and integration related expenses	Restructuring, acquisition and integration related expenses	(3)		(5)		(5)		(8)		Restructuring, acquisition and integration related expenses		(4)		(2)
(Loss) gain on sale of assets		(1)		(1)		4		(1)
Multiemployer pension plan withdrawal benefit		—		8		—		8
(Loss) gain on sale of assets and other asset charges										(Loss) gain on sale of assets and other asset charges		(19)		5

Other retail benefit		—		1		—		1
Business transformation costs	Business transformation costs	(4)		—		(9)		—		Business transformation costs		(15)		(5)
Income before income taxes		$	31	$	93	$	103	$	169
Other adjustments										Other adjustments		(4)		—
(Loss) income before income taxes										(Loss) income before income taxes		$	(48)	$	72
Depreciation and amortization:	Depreciation and amortization:									Depreciation and amortization:
Wholesale	Wholesale	$	62	$	61	$	126	$	122	Wholesale		$	67	$	64
Retail	Retail	10		8		18		15		Retail		8		8
Other	Other	1		—		3		1		Other		3		2
Total depreciation and amortization	Total depreciation and amortization	$	73	$	69	$	147	$	138	Total depreciation and amortization		$	78	$	74
Payments for capital expenditures:	Payments for capital expenditures:									Payments for capital expenditures:
Wholesale	Wholesale	$	74	$	46	$	131	$	98	Wholesale		$	71	$	57
Retail	Retail	10		4		20		8		Retail		3		10

Total capital expenditures	Total capital expenditures	$	84	$	50	$	151	$	106	Total capital expenditures		$	74	$	67

(1)As presented in Note 3—Revenue Recognition, the Company recorded ~~$353~~$321 million and ~~$356~~$334 million for the ~~second~~first quarters of fiscal ~~2023~~2024 and ~~2022, respectively, and $687 million and $695 million in fiscal~~ 2023, ~~and 2022 year-to-date,~~ respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale to Retail sales that have been eliminated upon consolidation.

~~(2)~~As a result of the segment profit measurement revision discussed above, previously reported Adjusted EBITDA disclosures by segment and the reconciliation to Income before income taxes has been recast to exclude the impact of the non-cash LIFO charge.

2219

Table of Contents

Total assets by reportable segment were as follows:


(in millions)	(in millions)	January 28, 2023		July 30, 2022		(in millions)	October 28, 2023		July 29, 2023
Assets:	Assets:					Assets:
Wholesale	Wholesale	$	6,684	$	6,733	Wholesale	$	6,858	$	6,405
Retail	Retail	637		599		Retail	649		648
Other	Other	352		335		Other	380		377
Eliminations	Eliminations	(38)		(39)		Eliminations	(39)		(36)
Total assets	Total assets	$	7,635	$	7,628	Total assets	$	7,848	$	7,394

NOTE ~~14—~~15—COMMITMENTS, CONTINGENCIES AND OFF-BALANCE SHEET ARRANGEMENTS

Guarantees and Contingent Liabilities

The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of ~~January~~October 28, 2023. These guarantees were generally made to support the business growth of wholesale customers. The guarantees are generally for the entire terms of the leases, fixture financing loans or other debt obligations with remaining terms that range from less than one year to seven years, with a weighted average remaining term of approximately four years. For each guarantee issued, if the wholesale customer or other third-party defaults on a payment, the Company would be required to make payments under its guarantee. Generally, the guarantees are secured by indemnification agreements or personal guarantees. The Company reviews performance risk related to its guarantee obligations based on internal measures of credit performance. As of ~~January~~October 28, 2023, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was ~~$16~~$14 million ($1411 million on a discounted basis). Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, as of ~~January~~October 28, 2023, a total estimated loss of $1 million is recorded in the Condensed Consolidated Balance Sheets.

The Company is a party to a variety of contractual agreements under which it may be obligated to indemnify the other party for certain matters in the ordinary course of business, which indemnities may be secured by operation of law or otherwise. These agreements primarily relate to the Company’s commercial contracts, service agreements, contracts entered into for the purchase and sale of stock or assets, operating leases and other real estate contracts, financial agreements, agreements to provide services to the Company and agreements to indemnify officers, directors and employees in the performance of their work. While the Company’s aggregate indemnification obligations could result in a material liability, the Company is not aware of any matters that are expected to result in a material liability. No amount has been recorded in the Condensed Consolidated Balance Sheets for these contingent obligations as the fair value has been determined to be de minimis.

In connection with Supervalu’s sale of New Albertson’s, Inc. (“NAI”) on March 21, 2013, the Company remains contingently liable with respect to certain self-insurance commitments and other guarantees as a result of parental guarantees issued by Supervalu with respect to the obligations of NAI that were incurred while NAI was Supervalu’s subsidiary. Based on the expected settlement of the self-insurance claims that underlie the Company’s commitments, the Company believes that such contingent liabilities will continue to decline. Subsequent to the sale of NAI, NAI collateralized most of these obligations with letters of credit and surety bonds to numerous state governmental authorities. Because NAI remains a primary obligor on these self-insurance and other obligations and has collateralized most of the self-insurance obligations for which the Company remains contingently liable, the Company believes that the likelihood that it will be required to assume a material amount of these obligations is remote. Accordingly, no amount has been recorded in the Condensed Consolidated Balance Sheets for these guarantees, as the fair value has been determined to be de minimis.

2320

Table of Contents

Agreements with Save-A-Lot and Onex

The Agreement and Plan of Merger pursuant to which Supervalu sold the Save-A-Lot business in 2016 (the “SAL Merger Agreement”) contains customary indemnification obligations of each party with respect to breaches of their respective representations, warranties and covenants, and certain other specified matters, on the terms and subject to the limitations set forth in the SAL Merger Agreement. Similarly, Supervalu entered into a Separation Agreement (the “Separation Agreement”) with Moran Foods, LLC d/b/a Save-A-Lot (“Moran Foods”), which contains indemnification obligations and covenants related to the separation of the assets and liabilities of the Save-A-Lot business from the Company. The Company also entered into a Services Agreement with Moran Foods (the “Services Agreement”), pursuant to which the Company provided Save-A-Lot with various technical, human resources, finance and other operational services. The Company primarily ceased providing services under the Services Agreement in fiscal 2022. The Services Agreement generally requires each party to indemnify the other party against third-party claims arising out of the performance of or the provision or receipt of services under the Services Agreement. While the Company’s aggregate indemnification obligations to Save-A-Lot and Onex, the purchaser of Save-A-Lot, could result in a material liability, the Company is not aware of any matters that are expected to result in a material liability. The Company has recorded the de minimis fair value of the guarantee in the Condensed Consolidated Balance Sheets within Other long-term liabilities.

Other Contractual Commitments

In the ordinary course of business, the Company enters into supply contracts to purchase products for resale and service contracts for fixed asset and information technology systems. These contracts typically include either volume commitments or fixed expiration dates, termination provisions and other standard contractual considerations. As of ~~January~~October 28, 2023, the Company had approximately ~~$562~~$606 million of non-cancelable future purchase obligations, most of which will be paid and utilized in the ordinary course within one year.

As of ~~January~~October 28, 2023, the Company had commitments of ~~$755~~$778 million for future undiscounted minimum lease payments on leases signed but not yet commenced with terms of up to 21 years from commencement date.

Legal Proceedings

The Company is one of dozens of companies that have been named in various lawsuits alleging that drug manufacturers, retailers and distributors contributed to the national opioid epidemic. Currently, UNFI, primarily through its subsidiary, Advantage Logistics, is named in approximately 43 suits pending in the United States District Court for the Northern District of Ohio where thousands of cases have been consolidated as Multi-District Litigation (“MDL”). In accordance with the Stock Purchase Agreement dated January 10, 2013, between New Albertson’s Inc. (“New Albertson’s”) and the Company (the “Stock Purchase Agreement”), New Albertson’s is defending and indemnifying UNFI in a majority of the cases under a reservation of rights as those cases relate to New Albertson’s pharmacies. In one of the MDL cases, MDL No. 2804 filed by The Blackfeet Tribe of the Blackfeet Indian Reservation, all defendants were ordered to Answer the Complaint, which UNFI did on July 26, 2019. To date, no discovery has been conducted against UNFI in any of the actions. On October 7, 2022, the MDL Court issued an order directing the Company and numerous other “non-litigating” defendants to submit by November 1, 2022, a list of opioid cases where the Company is named and opioid dispensing and distribution data. The Company produced the data in compliance with the order. On March 8, 2023, the Company received a subpoena from the Consumer Protection Division of the Maryland Attorney General’s Office seeking records related to the distribution and dispensing of opioids. On May 19, 2023, the Company provided an initial production in response to the subpoena and is in the process of gathering additional responsive documents. The Company believes these claims are without merit and isintends to vigorously ~~defending~~defend this matter.

Table of Contents

On January 21, 2021, various health plans filed a complaint in Minnesota state court against the Company, Albertson’s Companies, LLC (“Albertson’s”) and Safeway, Inc. alleging the defendants committed fraud by improperly reporting inflated prices for prescription drugs for members of health plans. The Plaintiffs assert six causes of action against the defendants: common law fraud, fraudulent nondisclosure, negligent misrepresentation, unjust enrichment, violation of the Minnesota Uniform Deceptive Trade Practices Act and violation of the Minnesota Prevention of Consumer Fraud Act. The plaintiffs allege that between 2006 and 2016, Supervalu overcharged the health plans by not providing the health plans, as part of usual and customary prices, the benefit of discounts given to customers purchasing prescription medication who requested that Supervalu match competitor prices. Plaintiffs seek an unspecified amount of damages. Similar to the above case, for the majority of the relevant period Supervalu and Albertson’s operated as a combined company. In March 2013, Supervalu divested Albertson’s and pursuant to the Stock Purchase Agreement, Albertson’s is responsible for any claims regarding its pharmacies. On February 19, 2021, Albertson’s and Safeway removed the case to Minnesota Federal District Court, and on March 22, 2021, ~~plaintiffs’~~plaintiffs filed a motion to remand to state court. On February 26, 2021, defendants filed a motion to dismiss. The hearing on the remand motion and motions to dismiss occurred on May 20, 2021. On September 21, 2021, the Federal District Court remanded the case to Minnesota state court and did not rule on the motion to dismiss, which was refiled in state court. On February 1, 2022, the state court denied the motion to dismiss. On November 27, 2023, the court held a scheduling conference and will enter a scheduling order setting various discovery and expert deadlines. The Company anticipates the trial date will be set for July 21, 2025. The Company believes these claims are without merit and is vigorously defending this matter.

~~Table of Contents~~

UNFI is currently subject to a qui tam action alleging violations of the False Claims Act (“FCA”). In United States ex rel. Schutte and Yarberry v. Supervalu, New Albertson’s, Inc., et al, which is pending in the U.S. District Court for the Central District of Illinois, the relators allege that defendants overcharged government healthcare programs by not providing the government, as a part of usual and customary prices, the benefit of discounts given to customers purchasing prescription medication who requested that defendants match competitor prices. The complaint was originally filed under seal and amended on November 30, 2015. The government previously investigated the relators’ allegations and declined to intervene. Violations of the FCA are subject to treble damages and penalties of up to a specified dollar amount per false claim. ~~Relators~~The relators elected to pursue the case on their own and have alleged FCA damages against Supervalu and New Albertson’s in excess of $100 million, not including trebling and statutory penalties. For the majority of the relevant period Supervalu and New Albertson’s operated as a combined company. In March 2013, Supervalu divested New Albertson’s (and related assets) pursuant to the Stock Purchase Agreement. Based on the claims that are currently pending and the Stock Purchase Agreement, Supervalu’s share of a potential award (at the currently claimed value by the relators) would be approximately $24 million, not including trebling and statutory penalties. Both sides moved for summary judgment. On August 5, 2019, the Court granted one of the relators’ summary judgment motions finding that the defendants’ lower matched prices are the usual and customary prices and that Medicare Part D and Medicaid were entitled to those prices. On July 2, 2020, the Court granted the defendants’ summary judgment motion and denied the relators’ motion, dismissing the case. On July 9, 2020, the relators filed a notice of appeal with the ~~7th~~Seventh Circuit Court of ~~Appeals, and on September 30, 2020 filed an appellate brief. On November 30, 2020, the Company filed its response. The hearing before the 7th Circuit Court of Appeals occurred on January 19, 2021.~~Appeals. On August 12, 2021, the ~~7th~~Seventh Circuit affirmed the District Court’s decision granting summary judgment in defendants’ favor. On September 23, 2021, the relators filed a petition for ~~rehearing and defendants filed a response on November 9, 2021.~~rehearing. On December 3, 2021, the ~~7th~~Seventh Circuit denied the petition for rehearing. On April 1, 2022, the relators filed a petition for a writ of certiorari with the United States Supreme ~~Court. The Company filed its response~~Court which was granted on ~~June 20, 2022. On August 22, 2022,~~January 13, 2023. Oral argument took place in the Supreme Court ~~issued an order inviting the Solicitor General to file a brief setting forth the views of the government~~ on ~~the petition for a writ of certiorari.~~April 18, 2023. On ~~December 6, 2022, the Solicitor General submitted its brief recommending that the Supreme Court grant the petition for certiorari. On January 13,~~June 1, 2023, the Supreme Court ~~granted~~reversed and vacated the ~~petition~~lower court’s judgment and remanded the case to the Seventh Circuit for ~~certiorari~~further proceedings. On July 27, 2023, the Seventh Circuit vacated the summary judgment order and ~~oral argument is~~remanded the case to the District Court. On August 22, 2023, the District Court set the trial date for April ~~18,~~29, 2024. On October 11, 2023, each of the Company and the relators filed a motion for summary judgment. Responses to the motions were filed on October 21, 2023, and replies are due December 15, 2023.

From time to time, the Company receives notice of claims or potential claims or becomes involved in litigation, alternative dispute resolution, such as arbitration, or other legal and regulatory proceedings that arise in the ordinary course of its business, including investigations and claims regarding employment law, including wage and hour (including class actions); pension plans; labor union disputes, including unfair labor practices, such as claims for back-pay in the context of labor contract negotiations and other matters; supplier, customer and service provider contract terms and claims, including matters related to supplier or customer insolvency or general inability to pay obligations as they become due; product liability claims, including those where the supplier may be insolvent and customers or consumers are seeking recovery against the Company; real estate and environmental matters, including claims in connection with its ownership and lease of a substantial amount of real property, both retail and warehouse properties; and antitrust. Other than as described above, there are no pending material legal proceedings to which the Company is a party or to which its property is subject.

Table of Contents

Predicting the outcomes of claims and litigation and estimating related costs and exposures involves substantial uncertainties that could cause actual outcomes, costs and exposures to vary materially from current expectations. Management regularly monitors the Company’s exposure to the loss contingencies associated with these matters and may from time to time change its predictions with respect to outcomes and estimates with respect to related costs and exposures. As of ~~January~~October 28, 2023, no material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.

Although management believes it has made appropriate assessments of potential and contingent loss in each of these cases based on current facts and circumstances, and application of prevailing legal principles, there can be no assurance that material differences in actual outcomes from management’s current assessments, costs and exposures relative to current predictions and estimates, or material changes in such predictions or estimates will not occur. The occurrence of any of the foregoing could have a material adverse effect on the Company’s financial condition, results of operations or cash flows.

2523

Table of Contents

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS ~~FOR PURPOSES OF THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT~~

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act, that involve substantial risks and uncertainties. In some cases you can identify these statements by forward-looking words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “seek,” “should,” “will” and “would,” or similar words. Statements that contain these words and other statements that are forward-looking in nature should be read carefully because they discuss future expectations, contain projections of future results of operations or of financial positions or state other “forward-looking” information.

Forward-looking statements involve inherent uncertainty and may ultimately prove to be incorrect. These statements are based on our management’s beliefs and assumptions, which are based on currently available information. These assumptions could prove inaccurate. You are cautioned not to place undue reliance on forward-looking statements. Except as otherwise may be required by law, we undertake no obligation to update or revise forward-looking statements to reflect changed assumptions, the occurrence of unanticipated events or actual operating results. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to:

•our dependence on principal customers;

•the relatively low margins of our business, which are sensitive to inflationary and deflationary ~~pressures;~~pressures and intense competition, including as a result of the continuing consolidation of retailers and the growth of consumer choices for grocery and consumable purchases;

•our ability to realize the anticipated benefits of our transformation initiatives;

•changes in relationships with our suppliers;

•our ability to operate, and rely on third parties to operate, reliable and secure technology systems;

•~~our ability to realize anticipated benefits of our strategic initiatives, including any acquisitions;~~

•labor and other workforce shortages and challenges;

•the addition or loss of significant customers or material changes to our relationships with these customers;

•our ~~sensitivity~~ability to ~~general economic conditions including inflation, changes in disposable income levels and consumer spending trends;~~

•~~the impact and duration~~realize anticipated benefits of ~~any pandemics or disease outbreaks;~~our acquisitions;

•our ability to continue to grow sales, including of our higher margin natural and organic foods and non-food products, and to manage that growth;

•~~increased competition~~our ability to maintain sufficient volume in our ~~industry,~~wholesale segment to support our operating infrastructure;

•the impact and duration of any pandemics or disease outbreaks;

•our ability to access additional capital;

•increases in healthcare, pension and other costs under our and multiemployer benefit plans;

•the potential for additional asset impairment charges;

•our sensitivity to general economic conditions including ~~as a result of continuing consolidation of retailers~~inflation, changes in disposable income levels and ~~the growth of chains, direct distribution by large retailers and the growth of online distributors;~~consumer purchasing habits;

•our ability to timely and successfully deploy our warehouse management system throughout our distribution centers and our transportation management system across the Company and to achieve efficiencies and cost savings from these efforts;

•the potential for disruptions in our supply chain or our distribution capabilities from circumstances beyond our control, including due to lack of long-term contracts, severe weather, labor ~~shortage~~shortages or work stoppages or otherwise;

•moderated supplier promotional activity, including decreased forward buying opportunities;

•union-organizing activities that could cause labor relations difficulties and increased costs;

•~~the potential for additional asset impairment charges;~~

•our ability to maintain food quality and safety; and

•volatility in fuel costs;

•~~volatility in foreign exchange rates; and~~

•~~our ability to identify and successfully complete asset or business acquisitions.~~

You should carefully review the risks described under ~~“Part I.~~“Risk Factors” included in Part I, Item 1A ~~Risk Factors”~~ of our Annual Report on Form 10-K for the year ended July ~~30, 2022~~29, 2023 (the “Annual Report”), as well as any other cautionary language in this Quarterly Report, as the occurrence of any of these events could have an adverse effect, which may be material, on our business, results of operations, financial condition or cash flows.

2624

Table of Contents

EXECUTIVE OVERVIEW

This Management’s Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with the unaudited Condensed Consolidated Financial Statements and notes thereto contained in this Quarterly Report on Form 10-Q, the information contained under the caption ~~“Forward-Looking~~“Cautionary Note Regarding Forward-Looking Statements,” and the information in the Annual Report.

Business Overview

UNFI is a leading distributor of grocery and non-food products, and support services provider to retailers in the United States and Canada. We believe we are uniquely positioned to provide the broadest array of products and services to customers throughout North America. Our diversified customer base includes over 30,000 customer locations ranging from some of the largest grocers in the country to smaller ~~independents.~~independents as well. We offer approximately ~~260,000~~250,000 products consisting of national, regional and private label brands grouped into ~~six~~the following main product categories: grocery and general merchandise; ~~produce; perishables and~~perishables; frozen foods; ~~nutritional supplements~~wellness and ~~sports nutrition;~~personal care items; and bulk and foodservice ~~products; and personal care items.~~products. We believe we are North America’s premier grocery wholesaler with 5654 distribution centers and warehouses representing approximately 30 million square feet of warehouse space. We are a coast-to-coast distributor with customers in all 50 states as well as all ten provinces in Canada, making us a desirable partner for retailers and consumer product manufacturers. We believe our total product assortment and service offerings are unmatched by our wholesale competitors. We plan to continue to pursue new business opportunities with independent retailers that operate diverse formats, regional and national chains, as well as international customers with wide-ranging needs. Our business is classified into two reportable segments: Wholesale and Retail; and also includes a manufacturing division and a branded product line division.

We are focused on executing our transformation strategy, which we believe will position us for long-term profitable growth. Our enterprise-wide business transformation ~~program~~strategy consists of four areas: network automation and optimization; commercial value creation; digital offering enhancement and infrastructure unification and modernization. ~~These four areas represent the next evolution of our business strategy.~~ To enable this business transformation, we have engaged consultants and ~~brought in new~~recruited leadership with transformation experience to upgrade and modernize our technology and platforms to better serve our customers.

We are also implementing near-term initiatives to help improve profitability while we execute our longer-term strategy. These include actioning administrative structure efficiencies, reprioritizing our selling and administrative spending, optimizing our stock-keeping unit (“SKU”) assortment as well as reviewing commercial contracts in collaboration with our customers and suppliers.

We expect to continue to use available capital to re-invest in our business and ~~to reduce outstanding debt, and~~ we remain committed to improving our financial leverage and reducing outstanding debt over ~~time. The decline in our financial leverage in recent years offers us increased flexibility to invest in growing our business and selectively return cash to shareholders as appropriate.~~the long term.

We believe we can enhance our profitability and accelerate our growth through our transformation efforts, which we expect will improve our cost structure, increase sales of products and services, and position us to provide tailored, data-driven solutions to help our customers run their businesses more efficiently and contribute to customer acquisitions. We believe the key drivers for value creation will be improved efficiency through the automation and optimization of our supply chain, as well as new customer growth ~~will be~~associated with the benefits of our significant scale, product and service offerings and nationwide footprint.

Trends and Other Factors Affecting our Business

Our results are impacted by macroeconomic and demographic trends, changes in the food distribution market structure and changes in consumer behavior. We believe food-at-home expenditures as a percentage of total food expenditures are subject to these trends, including changes in consumer behaviors in response to social and economic trends, such as levels of disposable income and the health of the economy in which our customers and our stores operate.

The U.S. economy has experienced economic volatility in recent years, ~~due to uncertain economic conditions,~~ which ~~have~~has had, and we expect may continue to have, an impact on consumer confidence. Consumer spending may continue to be impacted by levels of discretionary income and consumers trading down to a less expensive mix of products for grocery items or buying fewer items. In addition, inflation ~~remains at elevated levels and~~ continues to ~~be unpredictable. For example, we experienced volatility in~~affect our ~~energy operating costs,~~business, and fluctuating commodity and labor input costs may continue to impact the prices of products we procure from manufacturers. We believe our product mix, which ranges from high-quality natural and organic products to national and local conventional brands, including cost conscious private label brands, positions us to serve a broad cross section of North American retailers and end customers, and may lessen the impact of any further shifts in consumer and industry trends in grocery product mix.

2725

Table of Contents

Uncertainty remains regarding the longer-term impact of the COVID-19 pandemic on our business as global economies, markets and supply chains respond to the ongoing effects. We continue to monitor guidelines released by the Centers for Disease Control and Prevention and the World Health Organization and, when appropriate, implement mitigation measures to protect our associates, including safety protocols and strongly encouraging vaccinations/boosters. Our results could be impacted by, among other factors, any resurgence of infection rates and new variants of COVID-19 with higher transmissibility, the availability and efficacy of vaccines and treatments, actions taken by governmental authorities and other third parties in response to the pandemic such as health and safety orders and mandates, companies’ remote work policies, any economic downturn, the impact on capital and financial markets, food-at-home purchasing levels and other consumer trends, each of which is uncertain. Any of these disruptions could adversely impact our business and results of operations.

We are also impacted by changes in food distribution trends affecting our Wholesale customers, such as direct store deliveries and other methods of distribution. Our Wholesale customers manage their businesses independently and operate in a competitive environment.

Wholesale Distribution Center Network

We evaluate our distribution center network to optimize performance and expect to incur incremental expenses related to any future network realignment, expansion or improvements, including initiatives under the network automation and optimization pillar of our transformation agenda. We are working to both minimize these potential future costs and obtain new business to further improve the efficiency of our transforming distribution network.

In fiscal 2022, our Allentown, Pennsylvania distribution center began operations, with a capacity of 1.3 million square feet to service customers in the surrounding geographic area. We incurred start-up costs and operating losses, as the volume in this facility continues to ramp up to its operating capacity.

Retail Operations

We currently operate ~~76 Retail~~79 retail grocery stores, including 54 Cub Foods corporate stores and 2225 Shoppers Food Warehouse stores. In addition, we supply another 26 Cub Foods stores operated by our Wholesale customers through franchise and equity ownership arrangements. We operate 81 pharmacies primarily within the stores we operate and the stores of our franchisees. In addition, we operate 2325 “Cub Wine and Spirit” and “Cub Liquor” stores.

We plan to continue to invest in our Retail segment in areas such as customer-facing merchandising initiatives, physical facilities, technology and operational tools. Cub Foods and Shoppers Food Warehouse anticipate continued investment in improving the customer and associate experience through express remodels focused on customer facing elements.

Impact of Product Cost Inflation

We experienced a mix of inflation across product categories during the ~~second~~first quarter of fiscal ~~2023~~.2024. In the aggregate across our businesses, including the mix of products, management estimates our businesses experienced product cost inflation of approximately ~~ten~~three percent in the ~~second~~first quarter of fiscal ~~2023~~,2024 as compared to the ~~second~~first quarter of fiscal ~~2022~~.2023. Cost inflation estimates are based on individual like items sold during the periods being compared. Changes in merchandising, customer buying habits and competitive pressures create inherent difficulties in measuring the impact of inflation on Net sales and Gross profit. Absent any changes in units sold or the mix of units sold, inflation generally has the effect of increasing sales. Under the last-in, first out (“LIFO”) method of inventory accounting, product cost increases are recognized within Cost of sales based on expected year-end inventory quantities and costs, which generally has the effect of decreasing Gross profit and the carrying value of inventory during periods of inflation.

Our pricing to our customers is determined at the time of sale primarily based on the then prevailing vendor listed base cost, and includes discounts we offer to our customers. Generally, in an inflationary environment as a wholesaler, rising vendor costs result in higher Net sales driven by higher vendor prices when other variables such as quantities sold and vendor promotions are constant. In the ~~second~~first quarter of fiscal ~~2023,~~2024, we experienced ~~a sequential deceleration in the number~~fewer and ~~magnitude of~~less significant vendor product cost increases as compared to the first quarter of fiscal ~~2023, which~~2023. These decreases negatively impacted our gross profit ~~rate.~~rate when comparing the first quarter of fiscal 2024 to the first quarter of fiscal 2023.

~~Table of Contents~~

Composition of Condensed Consolidated Statements of Operations and Business Performance Assessment

Net ~~sales~~Sales

Our Net sales consist primarily of product sales of natural, organic, specialty, produce, and conventional grocery and non-food products, ~~and support services revenue from retailers,~~ adjusted for customer volume discounts, vendor incentives when applicable, returns and allowances, and professional services revenue. Net sales also include amounts charged by us to customers for shipping and handling and fuel surcharges.

Cost of ~~sales~~Sales and Gross ~~profit~~Profit

The principal components of our Cost of sales include the amounts paid to suppliers for product sold, plus transportation costs necessary to bring the product to, or move product between, our distribution centers and retail stores, partially offset by consideration received from suppliers in connection with the purchase or promotion of the suppliers’ products.

Table of Contents

Operating ~~expenses~~Expenses

Operating expenses include distribution expenses of warehousing, delivery, purchasing, receiving, selecting, and outbound transportation expenses, and selling and administrative expenses. These expenses include salaries and wages, employee benefits, occupancy, insurance, depreciation and amortization expense and share-based compensation expense.

Restructuring, ~~acquisition~~Acquisition and ~~integration related expenses~~Integration Related Expenses

Restructuring, acquisition and integration related expenses reflect expenses resulting from restructuring activities, including severance costs, facility closure asset impairment charges and costs, share-based compensation acceleration charges and acquisition and integration related expenses. Integration related expenses include certain professional consulting expenses and incremental expenses related to combining facilities required to optimize our distribution network as a result of acquisitions.

Loss (Gain) on Sale of Assets and Other Asset Charges

Loss (gain) on sale of assets and other asset charges primarily includes losses (gains) on sales of assets, losses on sales of financial assets, and asset impairments.

Net ~~periodic benefit income, excluding service cost~~Periodic Benefit Income, Excluding Service Cost

Net periodic benefit income, excluding service cost reflects the recognition of expected returns on benefit plan assets and interest costs on plan liabilities.

Interest ~~expense, net~~Expense, Net

Interest expense, net includes primarily interest expense on long-term debt, net of capitalized interest, loss on debt extinguishment, interest expense on finance lease obligations, amortization of financing costs and discounts, and interest income.

Adjusted EBITDA

Our Condensed Consolidated Financial Statements are prepared and presented in accordance with generally accepted accounting principles in the United States (“GAAP”). In addition to the GAAP results, we consider certain non-GAAP financial measures to assess the performance of our business and understand underlying operating performance and core business trends, which we use to facilitate operating performance comparisons of our business on a consistent basis over time. Adjusted EBITDA is provided as a supplement to our results of operations and related analysis, and should not be considered superior to, a substitute for or an alternative to, any financial measure of performance prepared and presented in accordance with GAAP. Adjusted EBITDA excludes certain items because they are non-cash items or items that do not reflect management’s assessment of ongoing business performance.

~~Table of Contents~~

We believe Adjusted EBITDA is useful to investors and financial institutions because it provides additional information regarding factors and trends affecting our business, which are used in the business planning process to understand expected operating performance, to evaluate results against those expectations, and because of its importance as a measure of underlying operating performance, as the primary compensation performance measure under certain compensation programs and plans. We believe Adjusted EBITDA is reflective of factors that affect our underlying operating performance and facilitate operating performance comparisons of our business on a consistent basis over time. Investors are cautioned that there are material limitations associated with the use of non-GAAP financial measures as an analytical tool. Certain adjustments to our GAAP financial measures reflected below exclude items that may be considered recurring in nature and may be reflected in our financial results for the foreseeable future. These measurements and items may be different from non-GAAP financial measures used by other companies. Adjusted EBITDA should be reviewed in conjunction with our results reported in accordance with GAAP in this Quarterly Report on Form 10-Q.

There are significant limitations to using Adjusted EBITDA as a financial measure including, but not limited to, it not reflecting the cost of cash expenditures for capital assets or certain other contractual commitments, finance lease obligation and debt service expenses, income taxes and any impacts from changes in working capital.

Table of Contents

We define Adjusted EBITDA as a consolidated measure which we reconcile by adding Net (loss) income ~~(loss)~~ including noncontrolling interests, less Net income attributable to noncontrolling interests, plus ~~non-operating~~Non-operating income and expenses, including Net periodic benefit income, excluding service cost, Interest expense, net and Other (income) expense, net, plus ~~Provision (benefit)~~(Benefit) provision for income taxes and Depreciation and amortization all calculated in accordance with GAAP, plus adjustments for Share-based compensation, non-cash LIFO charge or benefit, Restructuring, acquisition and integration related expenses, Goodwill impairment charges, ~~(Gain) loss~~Loss (gain) on sale of assets and other asset charges, certain legal charges and gains, and certain other non-cash charges or other items, as determined by management.

~~During fiscal 2022, we revised our~~ The changes to the definition of Adjusted EBITDA from prior periods reflect changes to ~~exclude~~line item references in our Consolidated Financial Statements, which do not impact the impact of the non-cash LIFO charge or benefit. We believe that this change provides a better indicator of our underlying operating performance and permits better comparability between periods. Refer to footnote one in the table below and Note 13—Business Segments in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information regarding the impact of the change in definitioncalculation of Adjusted EBITDA.

~~Table of Contents~~

Assessment of Our Business Results

The following table sets forth a summary of our results of operations and Adjusted EBITDA for the periods indicated. We have revised the following tables for the change in segment profit measurement for Adjusted EBITDA as discussed in Note 13—Business Segments within Part I, Item 1 of this Quarterly Report on Form 10-Q.


		13-Week Period Ended						26-Week Period Ended							13-Week Period Ended
(in millions)	(in millions)	January 28, 2023		January 29, 2022		Change		January 28, 2023		January 29, 2022		Change		(in millions)		October 28, 2023		October 29, 2022		Change
Net sales	Net sales	$	7,816	$	7,416	$	400	$	15,348	$	14,413	$	935	Net sales		$	7,552	$	7,532	$	20
Cost of sales	Cost of sales	6,747		6,341		406		13,183��		12,296		887		Cost of sales		6,522		6,436		86
Gross profit	Gross profit	1,069		1,075		(6)		2,165		2,117		48		Gross profit		1,030		1,096		(66)
Operating expenses	Operating expenses	1,002		944		58		2,002		1,876		126		Operating expenses		1,023		1,000		23
Restructuring, acquisition and integration related expenses	Restructuring, acquisition and integration related expenses	3		5		(2)		5		8		(3)		Restructuring, acquisition and integration related expenses		4		2		2
Loss (gain) on sale of assets		1		1		—		(4)		1		(5)
Operating income		63		125		(62)		162		232		(70)
Loss (gain) on sale of assets and other asset charges														Loss (gain) on sale of assets and other asset charges		19		(5)		24
Operating (loss) income														Operating (loss) income		(16)		99		(115)
Net periodic benefit income, excluding service cost	Net periodic benefit income, excluding service cost	(7)		(10)		3		(14)		(20)		6		Net periodic benefit income, excluding service cost		(3)		(7)		4
Interest expense, net	Interest expense, net	39		44		(5)		74		84		(10)		Interest expense, net		35		35		—
Other income, net	Other income, net	—		(2)		2		(1)		(1)		—		Other income, net		—		(1)		1
Income before income taxes		31		93		(62)		103		169		(66)
Provision for income taxes		9		25		(16)		14		24		(10)
Net income including noncontrolling interests		22		68		(46)		89		145		(56)
(Loss) income before income taxes														(Loss) income before income taxes		(48)		72		(120)
(Benefit) provision for income taxes														(Benefit) provision for income taxes		(9)		5		(14)
Net (loss) income including noncontrolling interests														Net (loss) income including noncontrolling interests		(39)		67		(106)
Less net income attributable to noncontrolling interests	Less net income attributable to noncontrolling interests	(3)		(2)		(1)		(4)		(3)		(1)		Less net income attributable to noncontrolling interests		—		(1)		1
Net income attributable to United Natural Foods, Inc.		$	19	$	66	$	(47)	$	85	$	142	$	(57)
Net (loss) income attributable to United Natural Foods, Inc.														Net (loss) income attributable to United Natural Foods, Inc.		$	(39)	$	66	$	(105)

Adjusted EBITDA	Adjusted EBITDA	$	181	$	220	$	(39)	$	388	$	420	$	(32)	Adjusted EBITDA		$	117	$	207	$	(90)

3128

Table of Contents

The following table reconciles Net (loss) income including noncontrolling interests to Adjusted EBITDA:

13-Week Period Ended 26-Week Period Ended
(in millions) January 28, 2023 January 29, 2022 January 28, 2023 January 29, 2022
Net income including noncontrolling interests $ 22 $ 68 $ 89 $ 145
Adjustments to net income including noncontrolling interests:
Less net income attributable to noncontrolling interests (3) (2) (4) (3)
Net periodic benefit income, excluding service cost (7) (10) (14) (20)
Interest expense, net 39 44 74 84
Other income, net — (2) (1) (1)
Provision for income taxes 9 25 14 24
Depreciation and amortization 73 69 147 138
Share-based compensation 11 12 23 23
LIFO charge(1)
29 19 50 30
Restructuring, acquisition and integration related expenses 3 5 5 8
Loss (gain) on sale of assets 1 1 (4) 1
Multiemployer pension plan withdrawal benefit(2)
— (8) — (8)
Other retail benefit(3)
— (1) — (1)
Business transformation costs(4)
4 — 9 —
Adjusted EBITDA $ 181 $ 220 $ 388 $ 420


	13-Week Period Ended
(in millions)		October 28, 2023		October 29, 2022
Net (loss) income including noncontrolling interests		$	(39)	$	67
Adjustments to net (loss) income including noncontrolling interests:
Less net income attributable to noncontrolling interests		—		(1)
Net periodic benefit income, excluding service cost		(3)		(7)
Interest expense, net		35		35
Other income, net		—		(1)
(Benefit) provision for income taxes		(9)		5
Depreciation and amortization		78		74
Share-based compensation		6		12
LIFO charge		7		21
Restructuring, acquisition and integration related expenses		4		2
Loss (gain) on sale of assets and other asset charges (1)		19		(5)
Business transformation costs (2)		15		5
Other adjustments (3)		4		—
Adjusted EBITDA		$	117	$	207

(1)~~During~~The first quarter of fiscal ~~2022, the Company revised its definition~~2024 includes a $21 million non-cash asset impairment charge related to one of Adjusted EBITDA to exclude the impact of the non-cash LIFO charge or benefit. The following illustrates the impact of the revised definition on previously reported periods to show the effect of this change:

13-Week Period Ended 26-Week Period Ended
(in millions) January 29, 2022 January 29, 2022
Adjusted EBITDA (previously reported definition) $ 201 $ 390
LIFO charge 19 30
Adjusted EBITDA (current definition) $ 220 $ 420

our corporate-owned office locations.

(2)Reflects ~~an adjustment to multiemployer pension plan withdrawal charge estimates.~~costs associated with business transformation initiatives, primarily including third-party consulting costs and licensing costs, which are included within Operating expenses in the Condensed Consolidated Statements of Operations.

(3)~~Reflects an insurance recovery associated with event-specific damages to certain retail stores and store closure costs.~~

~~(4)Reflects~~Primarily reflects third-party professional consulting costs for business transformation initiatives, including network automation and optimization, commercial value creation, digital offering enhancement and infrastructure unification and modernization.service fees related to shareholder negotiations.

~~Table of Contents~~

RESULTS OF OPERATIONS

Net Sales

Our Net sales by customer channel was as follows (in millions except percentages):

13-Week Period Ended Increase (Decrease) 26-Week Period Ended Increase (Decrease)
Customer Channel(1)
January 28,
2023 January 29,
2022 $ % January 28,
2023 January 29,
2022 $ %
Chains $ 3,322 $ 3,243 $ 79 2.4 % $ 6,546 $ 6,325 $ 221 3.5 %
Independent retailers 1,980 1,905 75 3.9 % 3,927 3,655 272 7.4 %
Supernatural 1,659 1,453 206 14.2 % 3,172 2,831 341 12.0 %
Retail 660 643 17 2.6 % 1,273 1,245 28 2.2 %
Other 609 581 28 4.8 % 1,244 1,161 83 7.1 %
Eliminations (414) (409) (5) 1.2 % (814) (804) (10) 1.2 %
Total net sales $ 7,816 $ 7,416 $ 400 5.4 % $ 15,348 $ 14,413 $ 935 6.5 %


	13-Week Period Ended	Increase (Decrease)
Customer Channel(1)		October 28, 2023		October 29, 2022		$		%
Chains		$	3,184	$	3,224	$	(40)	(1.2)	%
Independent retailers		1,899		1,947		(48)		(2.5)	%
Supernatural		1,612		1,513		99		6.5	%
Retail		606		613		(7)		(1.1)	%
Other		646		635		11		1.7	%
Eliminations		(395)		(400)		5		(1.3)	%
Total net sales		$	7,552	$	7,532	$	20	0.3	%

(1)Refer to Note 3—Revenue Recognition in Part 1, Item 1 of this Quarterly Report on Form 10-Q for our channel definitions and additional information.

~~Second Quarter~~

Our Net sales for the ~~second~~first quarter of fiscal ~~2023~~2024 increased approximately ~~5.4%~~0.3% from the ~~second~~first quarter of fiscal ~~2022.~~2023. The increase in Net sales was primarily driven by inflation and new ~~business. This new~~ business ~~resulted from selling new or expanded categories to~~with existing customers, ~~and adding new customers.~~primarily resulting from growth in our Supernatural channel. These increases were ~~partially offset by a decrease in units sold.~~

Chains and Independent retailers Net sales increased primarily due to growth in sales to existing and new customers, including an increase from higher product costs, which drove higher wholesale selling prices to our customers, partially offset by a decrease in units sold.

~~Supernatural Net sales increased primarily due to growth in existing store sales, including the supply of new fresh categories, inflation, and increased sales to new stores, partially~~largely offset by a decrease in units sold.

Retail Net sales ~~increased~~decreased primarily due to a ~~0.9% increase~~3.2% decrease in identical store sales from ~~higher average basket sizes driven by inflation, offset by~~ lower volume.

~~Other Net sales increased primarily due to higher eCommerce sales.~~

~~Year-to-Date~~

Our Net sales for fiscal 2023 year-to-date increased approximately 6.5% from fiscal 2022 year-to-date. The increase in Net sales was primarily driven by inflation and new business. This new business resulted from selling new or expanded categories to existing customers and adding new customers. These increases were partially offset by a decrease in units sold.

Chains Net sales increased primarily due to growth in sales to existing and new customers, including an increase from higher product costs, which drove higher wholesale selling prices to our customers, partially offset by a decrease in units sold.

Independent retailers Net sales increased primarily due to increased sales under a supply agreement with a new customer within the Atlantic region commencing in the first quarter of fiscal 2022 and growth in sales to existing customers, including an increase from higher product costs, which drove higher wholesale selling prices to our customers, partially offset by a decrease in units sold.

Supernatural Net sales increased primarily due to growth in existing store sales, including the supply of new fresh categories, inflation, and increased sales to new stores, partially offset by a decrease in units sold.

3329

Table of Contents

~~Retail Net sales increased primarily due to a 1.4% increase in identical store sales from higher average basket sizes driven by inflation, offset by lower volume.~~

~~Other Net sales increased primarily due to higher eCommerce sales.~~

Cost of Sales and Gross Profit

Our gross profit decreased $6$66 million, or ~~0.6%~~6.0%, to ~~$1,069~~$1,030 million for the ~~second~~first quarter of fiscal ~~2023,~~2024, from ~~$1,075~~$1,096 million for the ~~second~~first quarter of fiscal ~~2022.~~2023. Our gross profit as a percentage of Net sales decreased to ~~13.7%~~13.6% for the ~~second~~first quarter of fiscal ~~2023~~2024 compared to ~~14.5%~~14.6% for the ~~second~~first quarter of fiscal ~~2022.~~2023. The LIFO charge was ~~$29~~$7 million and ~~$19~~$21 million in the ~~second~~first quarter of fiscal ~~2023~~2024 and ~~2022,~~2023, respectively. Excluding the non-cash LIFO charge, gross profit rate was ~~14.0%~~13.7% of Net sales and 14.8% of Net sales for the ~~second~~first quarter of fiscal ~~2023~~2024 and ~~2022~~2023, respectively. The decrease in gross profit rate, excluding the LIFO charge, was primarily driven by lower ~~current period~~levels of procurement gains ~~due to the~~resulting from decelerating ~~rate of inflation and lower inventory gains.~~

~~Our gross profit increased $48 million, or 2.3% to $2,165 million for fiscal~~ ~~2023 year-to-date, from $2,117 million for fiscal 2022 year-to-date. Our gross profit as a percentage of Net sales decreased to 14.1% for~~ ~~fiscal~~ ~~2023 year-to-date compared to 14.7% for fiscal 2022 year-to-date. The LIFO charge was $50 million and $30 million for~~ ~~fiscal~~ ~~2023 and fiscal 2022 year-to-date, respectively. Excluding the non-cash LIFO charge, gross profit rate was 14.4% of Net sales and 14.9% of Net sales for~~ ~~fiscal~~ 2023 and fiscal 2022 year-to-date, respectively. The decrease in gross profit rate, excluding LIFO charge, was primarily driven by lower current period procurement gains due to the decelerating rate of inflation, lower inventory gains and customer mix.inflation.

Operating Expenses

Operating expenses increased ~~$58~~$23 million, or ~~6.1%~~2.3%, to ~~$1,002~~$1,023 million, or ~~12.8%~~13.5% of Net sales, for the ~~second~~first quarter of fiscal ~~2023~~2024 compared to ~~$944~~$1,000 million, or ~~12.7%~~13.3% of Net sales, for the ~~second~~first quarter of fiscal ~~2022.~~2023. The increase in Operating expenses as a ~~percent~~percentage of Net sales was ~~approximately flat compared~~primarily driven by investments in our transformation initiatives, partially offset by lower transportation and distribution center labor costs due to increased operational efficiencies across our supply chain and a decrease in volume.

Loss (Gain) on Sale of Assets and Other Asset Charges

Loss on sale of assets and other asset charges was $19 million in the ~~second~~first quarter of fiscal ~~2022, after excluding an $8 million benefit related to an adjustment~~2024, compared to a ~~previous multiemployer pension plan withdrawal charge estimate in~~gain on sale of assets of $5 million for the ~~second~~first quarter of fiscal ~~2022.~~2023. The first quarter of fiscal 2024 primarily includes a $21 million asset impairment charge related to one of our corporate-owned office locations. There were no asset impairment charges in the first quarter of fiscal 2023.

Operating expenses increased $126 million, or 6.7%, to $2,002 million, or 13.0% of Net sales, for fiscal 2023 year-to-date compared to $1,876 million, or 13.0% of Net sales, for fiscal 2022 year-to-date. Operating expenses as a percent of Net sales was approximately flat to the second quarter fiscal 2022 year-to-date; however, Operating expenses included higher occupancy costs in fiscal 2023 year-to-date, which were offset by leveraging fixed expenses across higher sales.

~~Operating~~(Loss) Income

Reflecting the factors described above, Operating ~~income decreased $62~~loss increased $115 million to ~~$63~~$16 million for the ~~second~~first quarter of fiscal ~~2023,~~2024, compared to ~~$125~~operating income of $99 million for the ~~second~~first quarter of fiscal ~~2022.~~2023. The ~~decrease~~increase in operating ~~income~~loss was primarily driven by a decrease in ~~gross~~Gross profit, a loss on sale of assets and other asset charges in the first quarter of fiscal 2024 compared to a gain in the first quarter of fiscal 2023, and an increase in ~~operating~~Operating expenses, ~~as described above.~~

Reflecting the factors described above, Operating income decreased $70 million, to $162 million for fiscal 2023 year-to-date, compared to $232 million for fiscal 2022 year-to-date. The decrease in operating income was primarily driven by an increase in operating expenses in excess of an increase in gross profiteach as described above.

Interest Expense, Net


		13-Week Period Ended				26-Week Period Ended					13-Week Period Ended
(in millions)	(in millions)	January 28, 2023		January 29, 2022		January 28, 2023		January 29, 2022		(in millions)		October 28, 2023		October 29, 2022
Interest expense on long-term debt, net of capitalized interest	Interest expense on long-term debt, net of capitalized interest	$	33	$	30	$	65	$	63	Interest expense on long-term debt, net of capitalized interest		$	33	$	32
Interest expense on finance lease obligations	Interest expense on finance lease obligations	—		5		1		9		Interest expense on finance lease obligations		1		1
Amortization of financing costs and discounts	Amortization of financing costs and discounts	3		3		5		6		Amortization of financing costs and discounts		2		2
Loss on debt extinguishment		3		6		3		6

Interest income										Interest income		(1)		—
Interest expense, net	Interest expense, net	$	39	$	44	$	74	$	84	Interest expense, net		$	35	$	35

~~Table of Contents~~

~~The decrease in interest~~Interest expense, net, in the ~~second~~first quarter of fiscal 2024 was unchanged from the first quarter of fiscal 2023 ~~compared to the second quarter of fiscal 2022 and in fiscal 2023 year-to-date compared to 2022 year-to-date was primarily driven~~as higher average interest rates were offset by lower outstanding debt balances and ~~finance leases, partially offset by~~ higher ~~average~~ interest ~~rates.~~income.

(Benefit) Provision for Income Taxes

Net (Loss) Income Attributable to United Natural Foods, Inc.

Reflecting the factors described in more detail above, Net ~~income~~loss attributable to United Natural Foods, Inc. was ~~$19~~$39 million, or ~~$0.31~~$0.67 per diluted common share, for the ~~second~~first quarter of fiscal ~~2023,~~2024, compared to ~~$66 million, or $1.08 per diluted common share, for the second quarter of fiscal 2022.~~

~~Reflecting the factors described in more detail above,~~ Net income attributable to United Natural Foods, Inc. ~~was $85~~of $66 million, or ~~$1.38~~$1.07 per diluted common share, for the first quarter of fiscal ~~2023 year-to-date, compared to $142 million, or $2.33 per diluted common share, for fiscal 2022 year-to-date.~~2023.

Table of Contents

Segment Results of Operations

In evaluating financial performance in each business segment, management primarily uses Net sales and Adjusted EBITDA of its business segments as discussed and reconciled within Note ~~13—~~14—Business Segments within Part I, Item 1 of this Quarterly Report on Form 10-Q and the above table within the Executive Overview section. The following tables set forth Net sales and Adjusted EBITDA by segment for the periods indicated.

13-Week Period Ended 26-Week Period Ended
(in millions) January 28, 2023 January 29, 2022 Change January 28, 2023 January 29, 2022 Change
Net sales:
Wholesale $ 7,514 $ 7,132 $ 382 $ 14,773 $ 13,866 $ 907
Retail 660 643 17 1,273 1,245 28
Other 56 50 6 116 106 10
Eliminations (414) (409) (5) (814) (804) (10)
Total Net sales $ 7,816 $ 7,416 $ 400 $ 15,348 $ 14,413 $ 935
Adjusted EBITDA:
Wholesale(1)
$ 137 $ 176 $ (39) $ 308 $ 351 $ (43)
Retail(1)
28 32 (4) 48 54 (6)
Other 15 12 3 34 16 18
Eliminations 1 — 1 (2) (1) (1)
Total Adjusted EBITDA $ 181 $ 220 $ (39) $ 388 $ 420 $ (32)

~~(1)~~Adjusted EBITDA amounts as previously reported by segment have been recast to conform with the revised segment profit measure of Adjusted EBITDA, which excludes the non-cash LIFO charge recorded by segment. The effect of the revision increased Adjusted EBITDA for Wholesale by $17 million and Retail by $2 million for the second quarter of fiscal 2022, and increased Adjusted EBITDA for Wholesale by $28 million and Retail by $2 million for fiscal 2022 year-to-date.


	13-Week Period Ended
(in millions)		October 28, 2023		October 29, 2022		Change
Net sales:
Wholesale		$	7,281	$	7,259	$	22
Retail		606		613		(7)
Other		60		60		—
Eliminations		(395)		(400)		5
Total Net sales		$	7,552	$	7,532	$	20
Adjusted EBITDA:
Wholesale		$	117	$	171	$	(54)
Retail		(1)		20		(21)
Other		3		19		(16)
Eliminations		(2)		(3)		1
Total Adjusted EBITDA		$	117	$	207	$	(90)

Net Sales

~~Second Quarter~~

Wholesale’s Net sales increased in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023 primarily due to inflation and growth in ~~sales to new and existing customers, including an increase from higher product costs, in~~the Supernatural ~~Chains and Independent retailers channels, as discussed in Results of Operations - Net Sales section above.~~

~~Table of Contents~~

~~Retail’s Net sales increased primarily due to a 0.9% increase in identical store sales from higher average basket sizes driven by inflation,~~channel, partially offset by ~~lower volume.~~

~~The increase~~a decrease in ~~eliminations Net sales was driven by higher sales from Other to Wholesale.~~

~~Year-to-Date~~

~~Wholesale’s Net sales increased primarily due to growth~~units sold and declines in ~~sales to new and existing customers, including an increase from higher product costs, in Supernatural,~~the Independent retailers and Chains channels, as discussed in Results of Operations - Net Sales section above.

Retail’s Net sales ~~increased~~decreased in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023 primarily due to a ~~1.4% increase~~3.2% decrease in identical store sales from ~~higher average basket sizes driven by inflation, offset by~~ lower volume.

The ~~increase~~decrease in eliminations Net sales in the first quarter of fiscal 2024 as compared to the first quarter of fiscal 2023 was ~~driven by higher~~primarily due to a decrease in Wholesale to Retail sales, ~~from Other to Wholesale.~~which are eliminated upon consolidation.

Adjusted EBITDA

~~Second Quarter~~

Wholesale’s Adjusted EBITDA decreased ~~22.2%~~31.6% for the ~~second~~first quarter of fiscal ~~2023~~2024 as compared to the ~~second~~first quarter of fiscal ~~2022.~~2023. The decrease was driven by ~~an increase~~a decline in ~~operating expenses combined with a slight~~ gross profit ~~decline~~ excluding the LIFO ~~charge.~~charge, partially offset by a decrease in operating expenses. Wholesale’s Gross profit ~~decrease~~ excluding the LIFO charge for the ~~second~~first quarter of fiscal ~~2023 was $3~~2024 decreased $62 million ~~with a~~and gross profit rate ~~decrease of~~decreased approximately 6989 basis points ~~primarily~~ driven by lower ~~current period~~levels of procurement gains ~~due to the~~resulting from decelerating ~~rate of inflation and lower inventory gains.~~inflation. Wholesale’s Operating expense ~~increased $36~~decreased $8 million, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note ~~13—~~14—Business Segments. Wholesale’s operating expense rate ~~was approximately flat compared~~decreased 14 basis points primarily driven by lower transportation and distribution center labor costs due to ~~the second quarter of fiscal 2022.~~a decrease in volume and increased operational efficiencies across our supply chain. Wholesale’s depreciation and amortization expense increased $1$3 million in the first quarter of fiscal 2024 as compared to the ~~second~~first quarter of fiscal ~~2022.~~2023.

Retail’s Adjusted EBITDA decreased ~~12.5%~~105.0% for the ~~second~~first quarter of fiscal ~~2023~~2024 as compared to the ~~second~~first quarter of fiscal ~~2022.~~2023. The decrease was driven by a decline in gross profit, and higher operating expenses primarily due to increased costs associated with new ~~store start-up costs and a slightly lower gross profit rate compared to the second quarter of fiscal 2022.~~stores. Retail’s Adjusted EBITDA excludes depreciation and amortization, share-based compensation, LIFO charge and other adjustments as outlined in Note ~~13—~~14—Business Segments. Retail’s depreciation and amortization expense ~~increased $2~~was flat to the first quarter of fiscal 2023.

Other Adjusted EBITDA decreased $16 million in the first quarter of fiscal 2024 as compared to the ~~second~~first quarter of fiscal ~~2022.~~

~~Year-to-Date~~

~~Wholesale’s Adjusted EBITDA decreased 12.3% for fiscal~~ 2023 ~~year-to-date from fiscal 2022 year-to-date. The decrease was driven by~~primarily due to an increase in operating expenses in excess of gross profit growth excluding the LIFO charge. Wholesale’s Gross profit increase excluding the LIFO charge for fiscal 2023 year-to-date was $62 million with a gross profit rate decrease of approximately 37 basis points primarily driven by lower current period procurement gains due to the decelerating rate of inflation and inventory gains as compared to fiscal 2022 year-to-date, and a decrease from changes in customer mix. Wholesale’s Operating expense increased $105 million, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 13—Business Segments. Wholesale’s operating expense rate increased 7 basis points primarily driven by higher occupancy costs in fiscal 2023 year-to-date. Wholesale’s depreciation and amortization expense increased $4 million compared to fiscal 2022 year-to-date.

Retail’s Adjusted EBITDA decreased 11.1% for fiscal 2023 year-to-date as compared to fiscal 2022 year-to-date, driven by higher operating expenses from higher employee-related costs and new store start-up costs. Retail’s Adjusted EBITDA excludes depreciation and amortization, share-based compensation, LIFO charge and other adjustments as outlined in Note 13—Business Segments.expenses.

3631

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Highlights

•Total liquidity as of ~~January~~October 28, 2023 was ~~$1,573~~$1,285 million and consisted of the following:

◦Unused credit under our $2,600 million asset-based revolving credit facility (the “ABL Credit Facility”) was ~~$1,533~~$1,248 million as of October 28, 2023, which decreased ~~$94~~$232 million from ~~$1,627~~$1,480 million as of July ~~30, 2022,~~29, 2023, primarily due to increased cash utilized to fund seasonal working capital increases, partially offset by the reduction in ABL borrowings related to the monetization of certain receivables net of the related $125 million voluntary prepayment on our term loan agreement dated as of October 22, 2018 (as amended, the “Term Loan Agreement”) described below.increases.

◦Cash and cash equivalents was ~~$40 million, which decreased $4 million from $44~~$37 million as of October 28, 2023, which was unchanged from July ~~30, 2022.~~29, 2023.

•Our total debt ~~decreased $46~~increased $338 million to ~~$2,077~~$2,301 million as of ~~January~~October 28, 2023 from ~~$2,123~~$1,963 million as of July ~~30, 2022,~~29, 2023, primarily ~~driven by debt repayments from net cash flow from operating activities, partially offset by payments for~~related to additional borrowings under the ABL Credit Facility to fund seasonal working capital ~~expenditures and repurchases of common stock during fiscal 2023 year-to-date.~~increases.

•Working capital ~~decreased $35~~increased $322 million to ~~$1,345 million as of January 28, 2023 from~~ $1,380 million as of October 28, 2023 from $1,058 million as of July ~~30, 2022,~~29, 2023, primarily due to ~~lower~~seasonal increases in inventory and accounts receivable levels, ~~resulting from the monetization of certain receivables,~~ partially offset by an increase in ~~inventories net of the associated increase in~~ accounts ~~payable.~~

•~~In the second quarter of fiscal 2023, we monetized certain receivables previously within accounts receivable, pursuant~~payable related to a purchase agreement with a third-party financial institution for the sale of certain receivables up to $300 million, which generated net cash proceeds of $282 million. These proceeds were used to make a $125 million voluntary prepayment on the Term Loan Facility and reduce outstanding borrowings under the ABL Credit Facility.inventories.

Sources and Uses of Cash

We expect to continue to replenish operating assets and pay down debt obligations with internally generated funds. A significant reduction in operating earnings or the incurrence of operating losses could have a negative impact on our operating cash flow, which may limit our ability to pay down our outstanding indebtedness as planned. Our credit facilities are secured by a substantial portion of our total assets. We expect to be able to fund debt maturities and finance lease liabilities through fiscal ~~2023~~2024 with internally generated funds and borrowings under the ABL Credit Facility.

Our primary sources of liquidity are from internally generated funds and from borrowing capacity under the ABL Credit Facility. We believe our short-term and long-term financing abilities are adequate as a supplement to internally generated cash flows to satisfy debt obligations and fund capital expenditures as opportunities arise. Our continued access to short-term and long-term financing through credit markets depends on numerous factors, including the condition of the credit markets and our results of operations, cash flows, financial position and credit ratings.

Primary uses of cash include debt service, capital expenditures, working capital maintenance, investments in cloud technologies and income tax payments. We typically finance working capital needs with cash provided from operating activities and short-term borrowings. Inventories are managed primarily through demand forecasting and replenishing depleted inventories.

We currently do not pay a dividend on our common stock. In addition, we are limited in the aggregate amount of dividends that we may pay under the terms of our Term Loan Facility, ABL Credit Facility and ~~Senior Notes.~~our $500 million of unsecured 6.750% senior notes due October 15, 2028 (the “Senior Notes”). Subject to certain limitations contained in our debt agreements and as market conditions warrant, we may from time to time refinance indebtedness that we have incurred, including through the incurrence or repayment of loans under existing or new credit facilities or the issuance or repayment of debt securities. Proceeds from the sale of any properties mortgaged and encumbered under our Term Loan Facility are required to be used to make additional Term Loan Facility payments or to be reinvested in the business.

Long-Term Debt

During the first quarter of fiscal ~~2023 year-to-date,~~2024, we borrowed a net ~~$83~~$340 million under the ABL Credit ~~Facility and made voluntary prepayments~~Facility. Refer to Note 8—Long-Term Debt in Part I, Item 1 of this Quarterly Report on ~~the Term Loan Facility totaling $130 million with~~Form 10-Q for a ~~portion~~detailed discussion of the ~~proceeds received from monetizing~~provisions of our credit facilities and certain ~~receivables previously within accounts receivable,~~long-term debt agreements and ~~from asset sales.~~additional information.

~~Table of Contents~~

Our Term Loan Agreement and Senior Notes do not include any financial maintenance covenants. Our ABL Loan Agreement subjects us to a fixed charge coverage ratio of at least 1.0 to 1.0 calculated at the end of each of our fiscal quarters on a rolling four quarter basis, if the adjusted aggregate availability is ever less than the greater of (i) $210 million and (ii) 10% of the aggregate borrowing base. We have not been subject to the fixed charge coverage ratio covenant under the ABL Loan Agreement, including through the filing date of this Quarterly Report on Form 10-Q. The Term Loan Agreement, Senior Notes and ABL Loan Agreement contain certain operational and informational covenants customary for debt securities of these types that limit our and our restricted subsidiaries’ ability to, among other things, incur debt, declare or pay dividends or make other distributions to our stockholders, transfer or sell assets, create liens on our assets, engage in transactions with affiliates, and merge, consolidate or sell all or substantially all of our and our subsidiaries’ assets on a consolidated basis. We were in compliance with all such covenants for all periods presented. If we fail to comply with any of these covenants, we may be in default under the applicable debt agreement, and all amounts due thereunder may become immediately due and payable.

Table of Contents

Derivatives and Hedging Activity

We enter into interest rate swap contracts from time to time to mitigate our exposure to changes in market interest rates as part of our strategy to manage our debt portfolio to achieve an overall desired position of notional debt amounts subject to fixed and floating interest rates. Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures.

As of ~~January~~October 28, 2023, we had an aggregate of ~~$1,000~~$750 million of floating rate notional debt subject to active interest rate swap contracts, which effectively ~~hedge~~fix the SOFR component of our floating interest ~~rate~~ payments through pay fixed and receive floating interest rate swap agreements. These fixed rates range from 2.360% to 2.875%, with maturities between ~~March~~October 2023 and October 2025. The fair ~~value~~values of these interest rate derivatives represent a ~~current~~total net asset of ~~$17 million and a long-term asset of $5~~$19 million as of ~~January~~October 28, 2023, and are subject to volatility based on changes in market interest rates.

From ~~time to time,~~time-to-time, we enter into fixed price fuel supply agreements and foreign currency hedges. As of ~~January~~October 28, 2023, we had fixed price fuel contracts and foreign currency forward agreements outstanding. Gains and losses and the outstanding assets and liabilities from these arrangements are insignificant.

Payments for Capital Expenditures

Our capital expenditures ~~for~~increased $7 million in the first quarter of fiscal ~~2023 year-to-date were $151~~2024 to $74 million compared to ~~$106~~$67 million for the first quarter of fiscal ~~2022 year-to-date, an increase of $45 million,~~2023, primarily due to automation investments in ~~automation.~~our supply chain. Our capital spending for the first quarter of fiscal ~~2023~~2024 and ~~2022 year-to-date~~2023 principally included information technology and supply chain ~~expenditures.~~expenditures, including maintenance expenditures and investments in growth initiatives. Fiscal ~~2022 year-to-date included continued investment in the new Allentown, Pennsylvania distribution center. Fiscal 2023~~2024 capital spending is expected to be approximately ~~$350~~$400 million and include projects that automate, optimize and expand our distribution network, ~~and finance~~as well as our technology platform investments. We expect to finance fiscal ~~2023~~2024 capital expenditures requirements with cash generated from operations and borrowings under our ABL Credit Facility. Future investments may be financed through long-term debt or borrowings under our ABL Credit Facility and cash from operations.

Cash Flow Information

The following summarizes our Condensed Consolidated Statements of Cash Flows:


		26-Week Period Ended							13-Week Period Ended
(in millions)	(in millions)	January 28, 2023		January 29, 2022		Change		(in millions)	October 28, 2023		October 29, 2022		Change
Net cash provided by operating activities		$	270	$	43	$	227
Net cash used in operating activities								Net cash used in operating activities	$	(254)	$	(262)	$	8
Net cash used in investing activities	Net cash used in investing activities	(143)		(129)		(14)		Net cash used in investing activities	(72)		(61)		(11)
Net cash (used in) provided by financing activities		(131)		91		(222)
Net cash provided by financing activities								Net cash provided by financing activities	326		319		7
Effect of exchange rate on cash								Effect of exchange rate on cash	—		(1)		1

Net (decrease) increase in cash and cash equivalents		(4)		5		(9)
Net decrease in cash and cash equivalents								Net decrease in cash and cash equivalents	—		(5)		5
Cash and cash equivalents, at beginning of period	Cash and cash equivalents, at beginning of period	44		40		4		Cash and cash equivalents, at beginning of period	37		44		(7)
Cash and cash equivalents, at end of period	Cash and cash equivalents, at end of period	$	40	$	45	$	(5)	Cash and cash equivalents, at end of period	$	37	$	39	$	(2)

The ~~increase~~decrease in ~~net~~Net cash ~~provided by~~used in operating activities in the first quarter of fiscal ~~2023 year-to-date~~2024 compared to the first quarter of fiscal ~~2022 year-to-date~~2023 was primarily due to lower levels of cash utilized in net working capital, partially offset by lower cash generated from net income in the ~~monetization~~first quarter of ~~certain receivables in~~ fiscal ~~2023 year-to-date discussed above, pursuant to a purchase agreement with a third-party financial institution, which generated net cash proceeds of $282 million.~~2024.

~~Table of Contents~~

The increase in net cash used in investing activities in the first quarter of fiscal ~~2023 year-to-date~~2024 compared to the first quarter of fiscal ~~2022 year-to-date~~2023 was primarily due to ~~higher capital expenditures, as described above, partially offset by a reduction~~an increase in payments for ~~investments.~~capital expenditures in the first quarter of fiscal 2024.

The increase in net cash ~~used in~~provided by financing activities in the first quarter of fiscal ~~2023 year-to-date~~2024 compared to the first quarter of fiscal ~~2022 year-to-date~~2023 was primarily due to ~~lower~~a decrease in cash utilized for employee restricted stock tax withholdings and repurchasing common stock, partially offset by a net decrease in proceeds from borrowings under the ~~ABL Credit Facility resulting from increases in net cash provided by operating activities, net of cash used in investing activities, as described above.~~revolving credit line.

Table of Contents

Other Obligations and Commitments

Our principal contractual obligations and commitments consist of obligations under our long-term debt, interest on long-term debt, operating and finance leases, purchase obligations, self-insurance liabilities and multiemployer plan withdrawal liabilities.

Except as otherwise disclosed in Note ~~14—~~15—Commitments, Contingencies and Off-Balance Sheet Arrangements and Note 7—8—Long-Term Debt, there have been no material changes in our contractual obligations since the end of fiscal ~~2022.~~2023. Refer to Item 7 of the Annual Report for additional information regarding our contractual obligations.

Pension and Other Postretirement Benefit Obligations

In fiscal ~~2023,~~2024, no minimum pension contributions are required to be made under the SUPERVALU INC. Retirement Plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). An insignificant amount of contributions are expected to be made to defined benefit pension plans and postretirement benefit plans in fiscal ~~2023.~~2024. We fund our defined benefit pension ~~plans~~plan based on the minimum contribution required under ERISA, the Pension Protection Act of 2006 and other applicable laws and additional contributions made at our discretion. We may accelerate contributions or undertake contributions in excess of the minimum requirements from time to time subject to the availability of cash in excess of operating and financing needs or other factors as may be applicable. We assess the relative attractiveness of the use of cash to accelerate contributions considering such factors as expected return on assets, discount rates, cost of debt, reducing or eliminating required Pension Benefit Guaranty Corporation variable rate premiums or in order to achieve exemption from participant notices of underfunding.

Off-Balance Sheet Multiemployer Pension Arrangements

We contribute to various multiemployer pension plans under collective bargaining agreements, primarily defined benefit pension plans. These multiemployer plans generally provide retirement benefits to participants based on their service to contributing employers. The benefits are paid from assets held in trust for that purpose. Plan trustees typically are responsible for determining the level of benefits to be provided to participants as well as the investment of the assets and plan administration. Trustees are appointed in equal number by employers and unions that are parties to the relevant collective bargaining ~~agreement.~~agreements. Based on the assessment of the most recent information available from the multiemployer plans, we believe that most of the plans to which we contribute are underfunded. We are only one of a number of employers contributing to these plans and the underfunding is not a direct obligation or liability to us.

Our contributions can fluctuate from year to year due to store closures, employer participation within the respective plans and reductions in headcount. Our contributions to these plans could increase in the near term. However, the amount of any increase or decrease in contributions will depend on a variety of factors, including the results of our collective bargaining efforts, investment returns on the assets held in the plans, actions taken by the trustees who manage the plans and requirements under the Pension Protection Act of 2006, the Multiemployer Pension Reform Act and Section 412(e) of the Internal Revenue Code. Furthermore, if we were to significantly reduce contributions, exit certain markets or otherwise cease making contributions to these plans, we could trigger a partial or complete withdrawal that could require us to record a withdrawal liability obligation and make withdrawal liability payments to the fund. Expense is recognized in connection with these plans as contributions are funded, in accordance with GAAP. We made contributions to these plans, and recognized expense of ~~$45~~$48 million in fiscal ~~2022.~~2023. In fiscal ~~2023,~~2024, we expect to contribute approximately ~~$51~~$50 million to multiemployer plans, subject to the outcome of collective bargaining and capital market conditions. We expect required cash payments to fund multiemployer pension plans from which we have withdrawn to be insignificant in any one fiscal year, which would exclude any payments that may be agreed to on a lump sum basis to satisfy existing withdrawal liabilities. Any future withdrawal liability would be recorded when it is probable that a liability exists and can be reasonably estimated, in accordance with GAAP. Any triggered withdrawal obligation could result in a material charge and payment obligations that would be required to be made over an extended period of time.

~~Table of Contents~~

We also make contributions to multiemployer health and welfare plans in amounts set forth in the related collective bargaining agreements. A small minority of collective bargaining agreements contain reserve requirements that may trigger unanticipated contributions resulting in increased healthcare expenses. If these healthcare provisions cannot be renegotiated in a manner that reduces the prospective healthcare cost as we intend, our Operating expenses could increase in the future.

Refer to Note 13—Benefit Plans in Part II, Item 8 of the Annual Report for additional information regarding the plans in which we participate.

Table of Contents

Share Repurchases

In September 2022, our Board of Directors authorized a ~~new~~ repurchase program for up to $200 million of our common stock over a term of four years (the “2022 Repurchase Program”). ~~Under the 2022 Repurchase Program, we repurchased approximately 390,000~~We did not repurchase any shares of our common stock ~~for a total cost of $17 million~~ in the ~~second~~first quarter of fiscal ~~2023 and approximately 729,000 shares of our common stock for a total cost of $29 million in fiscal 2023 year-to-date.~~2024. As of ~~January~~October 28, 2023, we had ~~$171~~$138 million remaining authorized under the 2022 Repurchase Program.

We will manage the timing of any repurchases of our common stock in response to market conditions and other relevant factors, including any limitations on our ability to make repurchases under the terms of our ABL Credit Facility, Term Loan Facility and Senior Notes. We may implement the 2022 Repurchase Program pursuant to a plan or plans meeting the conditions of Rule 10b5-1 under the Exchange Act.

Critical Accounting ~~Policies and~~ Estimates

There were no material changes to our critical accounting ~~policies~~estimates during the period covered by this Quarterly Report on Form 10-Q. Refer to the description of critical accounting ~~policies~~estimates included in Item 7 of our Annual Report.

Seasonality

Overall product sales are fairly balanced throughout the year, although demand for certain products of a seasonal nature may be influenced by holidays, changes in seasons or other annual events. Our working capital needs are generally greater during the months of and leading up to high sales periods, such as the buildup in inventory leading to the calendar year-end holidays. Our inventory, accounts payable and accounts receivable levels may be impacted by macroeconomic impacts and changes in food-at-home purchasing rates. These effects can result in normal operating fluctuations in working capital balances, which in turn can result in changes to cash flow from operations that are not necessarily indicative of long-term operating trends.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Our exposure to market risk results primarily from fluctuations in interest rates on our borrowings and our interest rate swap agreements, and price increases in diesel fuel. Except as described in Note 6—7—Derivatives and Note 7—8—Long-Term Debt in Part I, Item 1 of this Quarterly Report on Form 10-Q, which are incorporated herein, there have been no other material changes to our exposure to market risks from those disclosed in our Annual Report.

Item 4. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. We carried out an evaluation, under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “Evaluation Date”). Based on this evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of the Evaluation Date, our disclosure controls and procedures were effective.

(b) Changes in internal controls. There has been no change in our internal control over financial reporting that occurred during the ~~second~~first quarter of fiscal ~~2023~~2024 that ~~has~~ materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

~~Table of Contents~~

Item 1. Legal Proceedings

From time to time, we are involved in routine litigation or other legal proceedings that arise in the ordinary course of our business, including investigations and claims regarding employment law including wage and hour, pension plans, unfair labor practices, labor union disputes, supplier, customer and service provider contract terms, product liability, real estate and antitrust. Other than as set forth in Note ~~14—~~15—Commitments, Contingencies and Off-Balance Sheet Arrangements in Part I, Item I of this Quarterly Report on Form 10-Q, which is incorporated herein, there are no pending material legal proceedings to which we are a party or to which our property is subject.

Item 1A. Risk Factors

There have been no material changes to our risk factors contained in Part I, Item 1A. Risk Factors, of our Annual Report.

Table of Contents

Item 2. Unregistered Sales of Equity Securities, ~~and~~ Use of Proceeds, and Issuer Purchases of Equity Securities

InOn September 21, 2022, our Board of Directors authorized ~~a new repurchase program~~the 2022 Repurchase Program for up to $200 million of our common stock over a term of four ~~years (the “2022~~years. Under the 2022 Repurchase ~~Program”).~~ Program, we have repurchased approximately 1,888,000 shares of our common stock for a total cost of $62 million. We did not repurchase any shares of our common stock in the first quarter of fiscal 2024. As of October 28, 2023, we had $138 million remaining authorized under the 2022 Repurchase Program.

Any repurchases ~~will~~are intended to be made in accordance with applicable securities laws from time to time in the open market, through privately negotiated transactions or otherwise. With respect to open market purchases, we may use a plan or plans meeting the conditions of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, which allows us to repurchase shares during periods when we otherwise might be prevented from doing so under insider trading laws or because of self-imposed blackout periods.

~~The following table presents purchases~~ We manage the timing of any repurchases in response to market conditions and other relevant factors, including any limitations on our ability to make repurchases under the terms of our ~~common stock~~ABL Credit Facility, Term Loan Facility and ~~related information for each of the months in the quarter ended January 28, 2023.~~

(in millions, except shares and per share amounts)
Total Number of Shares Purchased(2)
Average Price Paid Per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs
Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(3)
Period(1):
October 30, 2022 to December 3, 2022 115,252 $ 45.66 104,742 $ 183
December 4, 2022 to December 31, 2022 159,776 $ 39.71 152,800 $ 177
January 1, 2023 to January 28, 2023 150,388 $ 39.76 132,686 $ 171
Total 425,416 $ 41.34 390,228 $ 171
Senior Notes.

~~(1)~~Dividends~~The reported periods conform to our fiscal calendar.~~

~~(2)These amounts represent~~. We are limited in the ~~deemed surrender by participants in our compensatory stock plans~~aggregate amount of ~~35,188 shares~~dividends that we may pay under the terms of our ~~common stock to cover withholding taxes from the vesting of restricted stock units granted under such plans~~Term Loan Facility, ABL Credit Facility and ~~the repurchase of 390,228 shares of our common stock under the 2022 Repurchase Program.~~

~~(3)The amounts shown in this column represent the amount remaining under the 2022 Repurchase Program as of December 3, 2022, December 31, 2022 and January 28, 2023.~~Senior Notes.

~~Item 5. Other Information~~

On March 3, 2023, upon recommendation of the Compensation Committee of the Company’s Board of Directors, the Board of Directors approved the Second Amended and Restated 2020 Equity Incentive Plan (the “Plan”) to make certain amendments that the Board determined to be in the best interests of the Company and its stockholders.

The amendments to the Plan (i) further clarify the intent of the Company that severance will not be paid under the Separation from Service without Cause (as defined in the Plan) provisions of the plan upon a separation due to performance issues, (ii) require the execution of a release in connection with the vesting of any shares as a result of a Separation from Service without Cause (as defined in the Plan), (iii) move restrictive covenant provisions from the Plan to the applicable award agreement to increase flexibility and enforceability, and (iv) other conforming changes.

The foregoing is a summary of, and is subject to, the actual terms and conditions set forth in the Plan and is qualified in its entirety by reference to the Plan and related award agreements. A copy of the Second Amended and Restated 2020 Equity Incentive Plan is filed herewith as Exhibit 10.1. Copies of the Form of RSU Award Agreement and Form of PSU Award Agreement for equity awards granted under the Plan are filed herewith as Exhibits 10.2 and 10.3, respectively.

4136

Table of Contents

Item 6. Exhibits


Exhibit No.			Description
2.1			Agreement and Plan of Merger, dated July 25, 2018, by and among SUPERVALU INC., SUPERVALU Enterprises, Inc., the Registrant and Jedi Merger Sub, Inc. (incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on July 26, 2018).
2.2			First Amendment to Agreement and Plan of Merger, dated as of October 10, 2018, by and among United Natural Foods, Inc., Jedi Merger Sub, Inc., SUPERVALU INC. and SUPERVALU Enterprises, Inc. (incorporated by reference to Registrant’s Current Report on Form 8-K, filed on October 10, 2018).
3.1			Certificate of Incorporation of the Registrant, as amended (restated for SEC filing purposes only) (incorporated by reference to the Registrant’s Quarterly Report on Form 10-Q for the quarter ended January 31, 2015).
3.2			~~Fourth~~Fifth Amended and Restated Bylaws of the Registrant (incorporated by reference to the Registrant's Annual Report on Form 10-Q for the quarter ended April 29, 2023).
10.1**			United Natural Foods, Inc. Annual Incentive Plan, as further amended, effective as of September 21, 2023 (incorporated by reference to the Registrant's Annual Report on Form 10-K for the year ended July 29, 2023).
10.2**			Form of RSU Award Agreement (CEO) (for grants made after September 21, 2023) pursuant to the Registrant’s Second Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended July 29, 2023).
10.3**			Form of PSU Award Agreement (CEO) (for grants made after September 21, 2023) pursuant to the Registrant’s Second Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended July 29, 2023).
10.4**			Form of RSU Award Agreement (for grants made after September 21, 2023) pursuant to the Registrant’s Second Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended July 29, 2023).
10.5**			Form of PSU Award Agreement (for grants made after September 21, 2023) pursuant to the Registrant’s Second Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended July 29, 2023).
10.6**			Form of RSU Award Agreement (Director) (for grants made after September 21, 2023) pursuant to the Registrant’s Second Amended and Restated 2020 Equity Incentive Plan (incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended July 29, 2023).
10.7**			Form of Indemnification Agreement (incorporated by reference to the Registrant’s Annual Report on Form 10-K for the year ended July 29, 2023).
10.8			Cooperation Agreement, dated as of September 25, 2023, by and among JCP Investment Partnership, LP, a Texas limited partnership, JCP Investment Partners, LP, a Texas limited partnership, JCP Investment Holdings, LLC, a Texas limited liability company, JCP Investment Management, LLC, a Texas limited liability company, and James C. Pappas, and United Natural Foods, Inc., a Delaware corporation (incorporated by reference to the Registrant’s Current Report on Form 8-K, filed on ~~October 19, 2018)~~September 26, 2023).
10.1* **			~~Second Amended and Restated United Natural Foods, Inc. 2020 Equity Incentive Plan, effective as of March 3, 2023.~~
10.2* **			~~Form of RSU Award Agreement pursuant to the Registrant’s Second Amended and Restated 2020 Equity Incentive Plan.~~
10.3* **			~~Form of PSU Award Agreement pursuant to the Registrant’s Second Amended and Restated 2020 Equity Incentive Plan.~~
10.4* **			~~United Natural Foods, Inc. Annual Incentive Plan, as further amended.~~
31.1*			Certification of CEO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*			Certification of CFO pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*			Certification of CEO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*			Certification of CFO pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*			The following materials from the United Natural Foods, Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended ~~January~~October 28, 2023, formatted in Inline XBRL (Extensible Business Reporting Language): (i) Condensed Consolidated Balance Sheets, (ii) Condensed Consolidated Statements of Operations, (iii) Condensed Consolidated Statements of Comprehensive (Loss) Income, (iv) Condensed Consolidated Statements of Stockholders’ Equity, (v) Condensed Consolidated Statements of Cash Flows, and (vi) Notes to Condensed Consolidated Financial Statements.
104			The cover page from our Quarterly Report on Form 10-Q for the ~~second~~first quarter of fiscal ~~2023,~~2024, filed with the SEC on ~~March 8,~~December 6, 2023, formatted in Inline XBRL (included as Exhibit 101).

* Filed herewith.

** Denotes a management contract or compensatory plan or arrangement.

* * *

4237

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			UNITED NATURAL FOODS, INC.

			/s/ JOHN W. HOWARD
			John W. Howard
			Chief Financial Officer
			(Principal Financial Officer and duly authorized officer)

Dated: ~~March 8,~~December 6, 2023

4338


(in millions, except shares and per share amounts)	Total Number of Shares Purchased(2)	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs	Approximate Dollar Value of Shares that May Yet be Purchased Under the Plans or Programs(3)
Period(1):
October 30, 2022 to December 3, 2022	115,252	$	45.66	104,742	$	183

December 4, 2022 to December 31, 2022	159,776	$	39.71	152,800	$	177


January 1, 2023 to January 28, 2023	150,388	$	39.76	132,686	$	171


Total	425,416	$	41.34	390,228	$	171