United Natural Foods Inc Q1 2026 Earnings Call Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: John Park - Wells Fargo Securities LLC - Analyst : Hey. Good morning. This is John Park on for Ed. Thanks for taking our question. I guess just given the gross margin strength in the quarter, can you talk about the sustainability of that? Maybe parsed out like how big of a benefit the network optimization efforts were in Q1?

Question: John Park - Wells Fargo Securities LLC - Analyst : Got it. And then just switching gears a little bit. Can you talk about the competitive environment at Retail for both Conventional and Natural? And are you seeing any changes out there more recently?

Question: Mark Carden - UBS AG - Analyst : So you continue to generate quite strong growth in Natural Organic. How would Conventional have shaken out ex the Allentown transition? It sounds like the impact there may have been more than expected just given you completed it ahead of your expectations And then what are you seeing with respect to the health of the consumer in both your Natural and Organic segments for the business?

Question: Mark Carden - UBS AG - Analyst : That's great. And then as a follow-up, just at this stage, have you guys seen much incremental customer attrition following the cyber-attack? You guys seem to be weathering it quite well last quarter. Just how was it compared to what you may have expected at the time of your last quarter call?

Question: Kelly Bania - Bank of Montreal - Analyst : Matteo, just a follow-up first on the procurement gains, I guess that helped Q1 a little bit. But if I heard you right, that's -- there's nothing there in the plan going forward. So wondering if you could just confirm I heard that right? And then can you help us understand did those procurement gains drive some upside to your plan, your internal plan for the quarter? And was that specific to any categories that you can help us just understand what was happening there?

Question: Kelly Bania - Bank of Montreal - Analyst : Okay. That's very helpful. Now, I was also wondering if I just ask a couple of questions about top line on the two sides of the Wholesale business. So first, on Conventional, I guess, excluding the optimization, it looks like sales were down in the mid-single-digit range. You called out some of the factors, I guess, going on during the quarter. But I guess, can you continue to hit your targets with that magnitude of core sales pressure in Conventional? And are you seeing or hearing suppliers in those categories becoming more promotional to help, maybe, drive some volume in those categories?

Question: Kelly Bania - Bank of Montreal - Analyst : Thank you, Sandy. Can I just also ask about the Natural side and, obviously, very strong there. Just wondering if you could comment a little bit more about how widespread that growth is? You talked about getting more business with large customers. But are you seeing more broad-based adoption of Natural and Organic? Because there has been some signs of a slowdown. It seems like you have a different point of view there. So wondering if you could just elaborate.

Question: Leah Jordan - Goldman Sachs Group Inc - Analyst : Sandy, you talked about new business projects in the prepared remarks, and it sounds like you're doing more with your largest customer. So just if we could get an update on your new business pipeline? What are the opportunities between new versus existing at this point? And then I think, ultimately, more importantly, how do you view the competitive environment for winning new business across Wholesale? What are the differences here between Conventional versus Natural in the current landscape?

Question: Leah Jordan - Goldman Sachs Group Inc - Analyst : That's very helpful. Thank you. And then one thing that stood out in the deck, you really were highlighting a refocused effort, it seemed, on private label. There seems to be new leadership there. Just seeing if you can provide more detail on your updated strategy. What are the opportunities in Natural versus Conventional for that category? What are the points of differentiation you're providing? And I don't think we've had an update, where are percent of sales on private label today as well?

Question: Peter Saleh - BTIG LLC - Analyst : Great. Thanks for taking all the questions. I just had one question on capital allocation. I know you're at 3.2 turns now on leverage, and that's down pretty substantially from last year. And well on your way to 2.5 turns by the end of this year. So how should we be thinking about modeling out your capital allocation strategy capital returns going forward? When you get to 2.5x, will you continue to focus on de-leveraging? Or should we consider more capital returns to shareholders? How do we think about that going forward?