What changed in this filing

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Item 1. Business

2022-09-27 compared with 2021-09-28 · 115 added, 139 removed, 188 unchanged (57% of the section changed)

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Our Background

As a leading distributor of natural, organic, specialty, produce and conventional grocery and non-food products, and provider of support services 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.

We offer nearly 300,000 products consisting of national, regional and private label brands grouped into six product categories:

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 as well.

We offer approximately 260,000 products consisting of national, regional and private label brands grouped into six product categories:

grocery and general merchandise;

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nutritional supplements and sports nutrition;

bulk and food service products;

bulk and foodservice products;

and personal care items.

We believe we are North America’s premier wholesaler with 56 distribution centers and warehouses representing approximately 30 million square feet of warehouse space.

We are a coast-to-coast distributor with customers in all fifty states as well as all ten provinces in Canada, making us a desirable partner for retailers and consumer product manufacturers.

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 aggressively pursue new business opportunities to independent retailers who operate diverse formats, regional and national chains, as well as international customers with wide-ranging needs.

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:

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Our Strategic Priorities

We are committed to executing our Fuel the Future strategy and its six strategic priorities that we believe will contribute to our future success:

1) Fulfill Power in Scale .

Optimizing and maximizing the capacity of our far-reaching distribution network, simplifying operations with higher levels of standardization, and making investments in technology.

2) Unlock Customer Experience .

Expanding our portfolio of brands, products and services while offering more tailored solutions to help our customers grow.

3) Taste the Future .

Investing in existing, high-margin growth platforms such as Brands+, Services, eCommerce and Fresh, as well as developing new sources of revenue that further complement our core wholesale business.

4) UNFI Pride .

Focusing on our people to deliver on:

our core value of safety in the workplace, as well as continuing our unique culture and enhancing the overall associate experience;

embracing and growing diversity of background, thought, and approach;

and our bold commitment toward addressing climate change and food insecurity and injustice.

5) Retail Optimized .

Advancing the retail business through greater investment in store upgrades, eCommerce, and digital platforms combined with new sites that we expect will contribute to growth.

6) Earn Results .

Driving sustainable growth and stakeholder value, with the Fuel the Future plan helping deliver long-term financial results.

Through our Fuel the Future strategy, we are striving to make our customers stronger, our supply chain better, and our food solutions more inspired.

We believe that we have been able to broaden our geographic penetration, expand our customer base, enhance and diversify our product selections, increase our market share, increase operating efficiencies in existing facilities and open new facilities in part through the acquisition of SUPERVALU INC.

We are committed to executing our Fuel the Future strategy.

Through this strategy, UNFI is building a food ecosystem that is better for all by delivering great food, more choices and fresh thinking for our customers and suppliers.

Our Fuel the Future strategy consists of six pillars:

Fulfill Power in Scale, Unlock the Customer Experience, Taste the Future, UNFI Pride, Retail Optimized, and Earn Results.

We are executing our strategy through four focus areas:

1) Customers:

Utilizing our scale, insights and innovative offerings to develop a differentiated value proposition that helps our customers grow and gain share.

2) Suppliers:

Strengthening our capabilities, especially those driven by technology, to deliver value creating programs to our suppliers.

3) Associates:

Building a culture that inspires pride and enables associates to do their best work.

4) Communities:

Supporting our communities and the planet through our wide-ranging and ambitious environment, social and governance (ESG) initiatives.

(“Supervalu”).

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We are committed to being good stewards of our planet, our communities and our people through tangible action.

In early 2021, we launched Better for All, our environmental, social and governance (“ESG”) plan aligned to three pillars:

Building Better for Our World, Our Communities and Our People.

Better for All focuses on six key priorities:

climate action, waste reduction, food safety, food access, associate safety and wellbeing, and diversity and inclusion.

To ensure progress against each of these areas, UNFI has established goals and commitments, which are set forth in our 2020 ESG Report, available on our website at www.betterforall.unfi.com.

Our ESG Report and the contents of our Better For All webpage are not incorporated into this Annual Report.

In fiscal 2022, we published our 11 th annual environmental, social and governance report, which we refer to as our Better For All report and the first update to our Better for All plan, which seeks to build a food system that is better for our people, our communities and our world.

The report is available on our website at www.betterforall.unfi.com and expands the six impact focus areas to provide a more in-depth look at the direct and indirect impacts at multiple points along the value chain.

Our key focus areas include Diversity & Inclusion, Responsible Procurement, Community Development, Governance, Associate Safety & Well-Being, Climate Action, Waste Reduction, Customer Health & Safety, and Energy Efficiency.

Our Better for All Report and the contents of our Better For All webpage are not incorporated by reference into or considered to be part of this Annual Report.

Better for Our World

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We invest in the efficiency of our transportation fleet and warehouses, generate on-site solar power for operations use and focus on diverting waste from landfills.

This year, we joined the U.S.

Food Loss and Waste 2030 Champions–businesses and organizations that have made a public commitment to reduce food loss and waste in their operations in the United States by 50 percent by the year 2030.

We also added more than 53 solar-powered, all-electric refrigerated trailers to our California fleet.

As part of our Better For All campaign, we have committed to develop science-based emissions reduction targets to be submitted for approval to the Science Based Targets initiative.

These targets are being developed based on current climate science.

In fiscal 2022, we announced a new set of climate targets covering Scope 1, 2 and 3 emissions, which have been validated by the Science Based Targets initiative.

To help address value chain emissions, we created the UNFI Climate Action Hub, which provides tools and resources to our suppliers to help innovate and scale climate solutions across the food system.

Better for Our Communities

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The UNFI Foundation, a 501(c)(3) organization, provides grants to nonprofit organizations working to build better food systems and nurture everyday health.

In fiscal 2022, the UNFI Foundation announced the UNFI Food Equity Project, which aims to invest in community-led solutions that create more equitable access to fresh, healthy food.

We also encourage our associates to make a difference by volunteering in their communities, including through paid volunteer time off.

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The safety and wellbeing of our associates is a top priority.

Throughout the COVID-19 pandemic, we have quickly and continuously adopted and added safety measures to protect our associates and the communities we serve.

We are focused on fostering a culture of caring and safety;

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We are also working to advance diversity, equity and inclusion in our workplace by creating and maintaining a culture of inclusion and empathy through open dialogue, effective associate training, and by honoring holidays and special events that speak to our associates’ identities.

Social and environmental responsibility is integral to our overall business strategy, and we believe these practices deliver significant value to our stakeholders, including our shareholders, associates, customers, suppliers and communities.

In fiscal 2021, we launched a new “Missions” platform to promote awareness of our Better for All goals and engage associates in issues that matter to them and to UNFI as a whole.

Social and environmental responsibility remains integral to our overall business strategy, and we believe these practices deliver significant value to our stakeholders, including our stockholders, associates, customers, suppliers and communities.

Our Customers

We maintain long-standing relationships with many of our customers.

We serve approximately 30,000 unique customer locations, primarily located across the United States and Canada, which we classify into five customer types:

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

• Independent retailers , which include smaller size accounts and include single store and multiple store locations, and group purchasing entities, but are not classified within Chains above or Other discussed below;

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

• Retail , which reflects our Retail segment, including the Cub Foods business and the remaining Shoppers locations, excluding Shoppers locations that are held for sale within discontinued operations;

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

We serve over 30,000 unique customer locations, primarily located across the United States and Canada, which we classify into five customer types:

Independent retailers;

Supernatural;

Refer to Note 3—Revenue Recognition in Part II, Item 8 of this Annual Report for additional information.

We have been the primary distributor to Whole Foods Market for more than 20 years.

We continue to serve as the primary distributor to Whole Foods Market in all of its regions in the United States pursuant to an amended distribution agreement.

On March 3, 2021, we entered into an amendment to our distribution agreement dated October 30, 2015.

The amendment extended the term of the distribution agreement from September 28, 2025 to September 27, 2027.

We continue to serve as the primary distributor to Whole Foods Market in all of its regions in the United States pursuant to an amended distribution agreement with a term through September 27, 2027.

Whole Foods Market is our only customer that represented more than 10% of total Net sales in fiscal 2022.

Our Wholesale customers, among others, included the following for fiscal 2021:

• Whole Foods Market, a leading natural and organic food retailer in the United States and Canada;

• C ash and Carry Stores, The Fresh Market, Coborn’s, National Co+op Grocers, Jerry’s Foods, Natural Grocers, Festival Foods, All American Quality Foods, Ahold Delhaize banners (Giant-Carlisle, Stop & Shop, Giant-Landover, and Hannaford), Lunds & Byerlys, Superior Grocers, Vallarta Supermarkets, Wegmans, Raley’s, Redner’s Markets, Niemann Foods, Inc., Dierberg’s, El Super Supermarkets, Sprouts Farmers Market, Kroger, Harris Teeter, Giant Eagle, Market Basket, Schnucks, Shop-Rite, Publix, Amazon.com, Inc.

Our international Net sales primarily reflect UNFI Canada, Inc.

(“UNFI Canada”) and exclude sales transacted in U.S.

(“UNFI Canada”), which represented approximately 1% of our Net sales in fiscal 2022.

International business excludes sales transacted in U.S.

dollars and shipped internationally, which is an even smaller component of our business.

UNFI Canada represented approximately one percent of our net sales in fiscal 2021.

We continue to seek to grow our Canadian operations.

We also continue to invest in technology and systems with the intent of growing our eCommerce business.

This includes sales to eCommerce companies as well as business-to-business sales to non-traditional customers such as yoga studios or bakeries.

We recently launched Community Marketplace by UNFI, a business-to-business digital eCommerce solution for emerging brands looking to expand distribution with UNFI customers.

We also continue to invest in technology and systems with the intent of improving the efficiency of our operations, enhancing the customer experience and growing our services platform, including our eCommerce and innovation businesses.

This includes sales to eCommerce companies as well as business-to-business sales to non-traditional customers.

In fiscal 2021, we launched Community Marketplace by UNFI, a business-to-business digital eCommerce solution for emerging brands looking to expand distribution with UNFI customers.

Through this virtual marketplace, suppliers gain immediate access to UNFI’s digital infrastructure to promote and sell their products to UNFI’s broad customer base while UNFI customers gain access to an even broader assortment of unique and local items with flexible order sizes and the convenience of ordering from multiple sources online in one place.

A key component of our historical growth has been to acquire distribution companies differentiated by product offerings, service offerings and market area.

We believe the expanded product and service offerings from these acquisitions has enhanced and will continue to enhance our ability to acquire new customers and present opportunities for cross-selling complementary product lines.

On October 22, 2018 (the “Supervalu acquisition date”), we acquired Supervalu for an aggregate purchase price of approximately $2.3 billion, which included the assumption of outstanding debt and liabilities.

The acquisition of Supervalu accelerated our “build out the store” strategy, diversified our customer base, enabled cross-selling opportunities, expanded market reach and scale, enhanced technology, capacity and systems, and is expected to continue to deliver significant cost savings and accelerate potential growth.

We believe that as a result of the Supervalu acquisition, we carry an unmatched product assortment that allows us to cross-sell natural products to conventional customers and conventional products to natural customers, all while reducing the number of weekly deliveries that each receives.

Supervalu provided a robust suite of services that are now available to our natural customer base, services necessary to run their businesses and that provide opportunities to simplify and focus on their operations.

We also believe the Supervalu acquisition provides additional scale to lower our overall costs as a percent of net sales.

Our expanded scale and product assortment as a result of the Supervalu acquisition uniquely positioned us to continue to serve our customers and communities through the volume demands across the full spectrum of grocery products experienced during the COVID-19 pandemic.

We organize and operate our Wholesale reportable segment through four U.S.

geographic regions:

Atlantic, South, Central and Pacific, each of which is led by a separate regional president responsible for product and service strategy, execution and financial results;

Central and Pacific, each of which is led by a separate regional president responsible for product and service strategy, execution and financial results;

and Canada Wholesale, which is operated separately from the U.S.

Wholesale business.

Product and service categories include, grocery, fresh, wellness, private brands, eCommerce, food service and multi-cultural.

Product and service categories include grocery, fresh, wellness, private brands, eCommerce, foodservice and multi-cultural.

This operating structure includes regional sales organizations and distribution center networks, which offer a combination of conventional and natural products to our customers as a consolidated supply solution.

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For financial reporting purposes, sales from our distribution centers to our own Retail stores are eliminated from of our Wholesale segment within Eliminations.

We offer Wholesale customers a wide variety of food and non-food products, and our own extensive lines of private label products.

We offer Wholesale customers a wide variety of food and non-food products, and our own lines of private label products.

We also offer a broad array of professional services.

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• offer a broader product and value add service selection than our competitors;

• offer operational excellence with high service levels and a higher percentage of on-time deliveries than our competitors;

• offer operational excellence with high service levels and a higher percentage of on-time deliveries and fill rates than our competitors;

• centralize and streamline general and administrative functions to reduce expenses;

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Net sales to customers are determined at the time of sale based on the then prevailing vendor listed base cost, and include discounts we offer to our customers.

The differential between the procured cost, including vendor funds and inbound freight, as compared to the net sales price of these products, generate our gross margin.

The differential between the procured cost, including vendor funds and inbound freight, as compared to the net sales price of these products, generates our gross margin.

A key component of our historical growth has been to acquire distribution companies differentiated by product offerings, service offerings and market area.

We believe the expanded product and service offerings from these acquisitions has enhanced and will continue to support our ability to acquire new customers and present opportunities for cross-selling complementary product lines.

The Company expects to selectively and strategically engage in acquisitions to enhance our capabilities and geographic footprint.

Since our strategic $2.3 billion acquisition of conventional distributor, Supervalu, the Company has prioritized the integration of Supervalu and debt reduction and has not undertaken any additional material acquisitions.

As our financial leverage has decreased following the Supervalu acquisition and to the extent it remains near our target levels, we may consider strategic acquisitions.

Our Retail segment includes 73 Cub Foods and Shoppers retail grocery stores.

Our retail stores provide an extensive grocery offering and, depending on size, a variety of additional products, including general merchandise, home, health and beauty care, and pharmacy.

We offer national and regional brands as well as our own private label products.

Depending on the banner, a typical Retail store carries approximately 17,000 to 21,000 core stock-keeping units (“SKUs”) and ranges in size from approximately 50,000 to 70,000 square feet.

We offer national and local brands, as well as our own private label products.

A typical retail store carries approximately 17,000 to 21,000 core stock-keeping units (“SKUs”) and ranges in size from approximately 50,000 to 70,000 square feet.

We believe our retail banners have strong local and regional brand recognition in the markets in which they operate.

Our Retail continuing operations are supplied by our Wholesale distribution centers.

In the fourth quarter of fiscal 2021, we determined that two of the four remaining Shoppers stores in discontinued operations no longer met the held for sale criterion for a probable sale to be completed within 12 months.

As a result, our Consolidated Financial Statements and financial information presented within this Annual Report reflect these two stores within the Retail segment operations within continuing operations, with prior periods having been revised to conform with the current period presentation.

Throughout this Annual Report, references to Retail exclude previously disposed Shoppers stores, two Shoppers stores that are held for sale, as well as the Hornbacher’s, Shop ‘n Save and Shop ‘n Save East retail banners, which we acquired as a result of the Supervalu acquisition and previously disposed.

For the periods in which we operated these stores, their results continue to be presented as discontinued operations.

Our Products and Services

Our Product Offering

Our Retail operations are principally supplied by five of our Wholesale distribution centers.

Our Product Offerings

Our extensive selection of products includes natural, organic, specialty, produce, and conventional grocery, and non-food products.

We offer nationally advertised brand name and private label products, including grocery (both perishable and nonperishable), general merchandise, home, health and beauty care, and pharmacy, which are sold through our Wholesale segment to wholesale customers and our Retail stores to shoppers.

We offer nationally recognized brand name and private label products, including grocery (both perishable and nonperishable), general merchandise, home, health and beauty care, and pharmacy, which are sold through our Wholesale segment to wholesale customers and our Retail stores.

We offer six main product categories:

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ESSENTIAL EVERYDAY® is our leading national brand equivalent private label solution with 2,500+ items for departments throughout the store.

It is complimented by SPRINGFIELD® as a regional solution and SHOPPERS VALUE®, which offers the budget conscious consumer quality alternatives to national brand.

It is complemented by SHOPPERS VALUE®, which offers the budget conscious consumer quality alternatives to national brands.

Our WILD HARVEST® brand offers a full range of products made with simple, wholesome ingredients across multiple categories, including pet foods.

Our Field Day® brand is primarily sold to natural store / co-op retailers as a private label solution.

Our category-specific brands, EQUALINE®, CULINARY CIRCLE®, ARCTIC SHORES SEAFOOD COMPANY®, BABY BASICS®, STONE RIDGE CREAMERY® and SUPER CHILL®, also provide national brand equivalent products at a competitive price.

Manufacturing and Natural Branded Products Businesses

Our Blue Marble Brands portfolio is a collection of national brands that offer organic, non-GMO, clean and specialty food.

The WOODSTOCK® brand has been pioneering organic/non-GMO products for over 34 years and continues to launch innovation.

Our category-specific brands, EQUALINE®, CULINARY CIRCLE®, ARCTIC SHORES SEAFOOD COMPANY®, STONE RIDGE CREAMERY® and SUPER CHILL®, also provide national brand equivalent products at a competitive price.

Our Blue Marble Brands portfolio is a collection of national brands that offer USDA organic, non-GMO Project Verified, and specialty food and non-food items.

The WOODSTOCK® brand has been pioneering organic/non-GMO products for over 35 years and continues to launch innovative products.

TUMARO’S is our better for you wrap brand.

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We operate an organic (United States Department of Agriculture (“USDA”) and Quality Assurance International (“QAI”)) and kosher (Circle K) certified packaging, roasting, and processing facility in New Jersey that is SQF (Safety Quality Food) level 2 certified.

Our Professional Services Offerings

Our Service Offerings

We offer a broad array of professional services that provide Wholesale customers with cost-effective and scalable solutions.

These services include pass-through programs in which vendors provide services directly to our Wholesale customers, as well as services and solutions we develop and provide directly.

Our services include retail store support, pricing strategy, shelf and planogram management, advertising, couponing, eCommerce, consumer convenience services, store design, equipment sourcing, electronic payments processing, network and data hosting solutions, and administrative back-office solutions.

The sales and operating results for these services are included within Wholesale.

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Trade and consumer marketing programs are supplier-sponsored programs that cater to a broad range of retail formats.

These programs are designed to educate consumers, profile suppliers and increase sales for retailers, many of which do not have the resources necessary to conduct such marketing programs independently.

All of our programs and services are designed to educate consumers, profile suppliers and increase sales for retailers, many of which do not have the resources necessary to conduct such marketing programs independently.

Our goal is to provide support to ensure long-term success.

Set forth below are the services offered by each of these programs:

Consumer Marketing Programs

• Monthly, region-specific, consumer circular programs, with the participating retailers’ imprint featuring products sold by the retailer to its customers.

We offer circular programs to our customers and vendors through negotiated pricing for the retailer, and also provide retailers with a physical flyer and shelf tags corresponding to each month’s promotions.

Retail Marketing Programs

• We offer circular programs to our customers and vendors, and also provide retailers with a physical flyer and shelf tags corresponding to each month’s promotions.

We also offer a web-based tool, which retailers can use to produce highly customized circulars and other marketing materials for their stores called the Customized Marketing Program.

• Truck advertising programs allow our suppliers to purchase advertising space on the sides of our hundreds of trailers traveling throughout the United States and Canada, increasing brand exposure to consumers.

• Web and digital marketing services including websites, mobile applications and eCommerce capabilities.

• Trailer wrap program allows our suppliers to purchase advertising space on the sides of our hundreds of trailers traveling throughout the United States and Canada, increasing exposure to end consumers.

We continually seek customer and supplier feedback to ascertain their needs and allow us to better service them.

We also provide our customers with:

• trends reports in the natural and organic industry:

• product data information such as best seller lists, store usage reports and catalogs;

• assistance with store layout designs, new store design and equipment procurement;

• planogramming, shelf and category management support;

• in-store signage and promotional materials, and assistance with product display planning and set up;

• shelf tags for products;

• a robust retailer portal with product information, search and ordering capabilities, reports and publications.

Trade Marketing Programs

• New item introduction programs showcase a supplier’s new items to retailers through trials and discounts.

• Customer Portal Advertising allows our suppliers to advertise directly to retailers using the portal that many retailers use to order product and/or gather product information.

• Foodservice options designed to support accounts in that category.

• myUNFI Customer allows our suppliers to advertise directly to retailers using the portal that many retailers use to order product and/or gather product information.

• Monthly specials catalogs that highlight promotions and new product introductions.

• Customized email marketing campaigns to share supplier product information or promotion directly to our Wholesale customers’ inbox.

• Specialized catalogs for holiday and seasonal products.

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• Various marketing vehicles are offered that support the needs of our diverse customer base, while providing suppliers a cost-effective means to market and promote their products.

We continually seek customer and supplier feedback to ascertain their needs and allow us to better service them.

We also provide our customers with:

• trends reports in the natural and organic industry;

• product data information such as best seller lists, store usage reports and catalogs;

• assistance with store layout designs, new store design and equipment procurement;

• planogramming, shelf and category management support;

• in-store signage and promotional materials, and assistance with product display planning and set up;

• shelf tags for products;

• a robust customer portal with product information, search and ordering capabilities, reports and publications.

Organic Certification

Our “Certified Organic Distributor” certification covers 30 of our natural distribution centers in the United States, except for facilities acquired in connection with the acquisitions of Tony’s, Haddon, and Nor-Cal.

Although not designated as a “Certified Organic Distributor” by QAI, the two Tony’s California locations are certified as Organic by the State of California Department of Public Health Food and Drug Branch, and Nor-Cal is currently registered with the California Department of Food and Agriculture Organic Program as an organic handler.

Our “Certified Organic Distributor” certification covers 25 of our distribution centers in the United States.

Although not designated as a “Certified Organic Distributor” by QAI, two of our California locations are certified as Organic by the State of California Department of Public Health Food and Drug Branch, and another California location is currently registered with the California Department of Food and Agriculture Organic Program as an organic handler.

In addition, our four Canadian distribution centers in British Columbia and Ontario each hold an organic distributor certification from either QAI or ProCert Canada.

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The majority of our suppliers are based in the United States and Canada, but we also source products from suppliers throughout Europe, Asia, North America, South America, Australia and New Zealand.

We believe suppliers seek to distribute their products through us because we provide access to a large customer base across the United States and Canada, distribute the majority of the suppliers’ products and offer a wide variety of marketing programs to our customers to help sell the suppliers’ products.

Substantially all product categories that we distribute are available from a number of suppliers and, therefore, we are not dependent on any single source of supply for any product category.

Substantially all product categories that we distribute are available from a number of suppliers and, therefore, we are not dependent on any single supply source for any product category.

In addition, although we have exclusive distribution arrangements and support programs with several suppliers, none of our suppliers accounted for more than 5% of our total purchases in fiscal 2022.

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As a result, we are able to negotiate purchases from suppliers on the basis of volume and other considerations that may include discounted pricing or prompt payment discounts.

Furthermore, some of our purchase arrangements include the right of return to the supplier with respect to products that we do not sell in a certain period of time.

Furthermore, some of our purchase arrangements include the right of return to the supplier with respect to products that we do not sell in a specified period of time.

Each region is responsible for placing its own orders and can select the products that it believes will most appeal to its customers, although each region is able to participate in our company-wide purchasing programs.

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We select the sites for our distribution centers to provide direct access to the markets we serve and configure them to minimize total operating costs.

This proximity allows us to reduce our transportation costs relative to those of our competitors that seek to service these customers from locations that are often much further away.

This proximity allows us to reduce our transportation costs relative to those of our competitors that seek to service these customers from locations that are often further away.

We believe that we incur lower inbound freight expense than our regional competitors because our scale allows us to buy full and partial truckloads of products.

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When financially advantageous, we pick up products from suppliers or satellite staging facilities and return them to our distribution centers using our own trucks.

Additionally, we generally can redistribute overstocks and inventory imbalances between our distribution centers if needed, which helps to reduce out-of-stocks and to sell perishable products prior to their expiration date.

Additionally, the scale of our distribution network provides us with the flexibility to shift volume amongst distribution centers in the case of volume spikes, unique customer needs, temporary inbound fill rate challenges and weather-related events as well as the capacity to support future sales growth.

The majority of our trucks are leased and are maintained by third-party national leasing companies, which in some cases maintain facilities on our premises for the maintenance and service of these vehicles.

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We have made significant investments in distribution, financial, information and warehouse management systems.

We continually evaluate and upgrade our management information systems at our regional operations in an effort to make the systems more efficient, cost-effective and responsive to customer needs.

We continually evaluate and upgrade our systems to enhance efficiency, cost-effectiveness and responsiveness to customer needs.

These systems include functionality in radio frequency inventory control, pick-to-voice systems, pick-to-light systems, computer-assisted order processing and slot locator/retrieval assignment systems.

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Customer returns are processed by scanning the UPC bar codes.

We also employ a management information system that enables us to lower our inbound transportation costs by making optimum use of our own fleet of trucks or by consolidating deliveries into full truckloads.

Orders from multiple suppliers and multiple distribution centers are consolidated into single truckloads for efficient use of available vehicle capacity.

In addition, we utilize route efficiency software that assists us in developing the most efficient routes for our outbound trucks.

As part of our “one company” approach, we are in the process of converting to a single national warehouse management and procurement system to integrate our existing facilities onto one nationalized platform across the organization.

We continue to focus on the automation of our new or expanded distribution centers that are at different stages of construction and implementation.

These steps and others are intended to promote operational efficiencies and improve operating expenses as a percentage of net sales.

Our Wholesale and Retail businesses operate in a highly competitive industry, which typically results in low profit margins for the industry.

Our food distribution business directly competes with many traditional and specialty grocery wholesalers and retailers that maintain or develop self-distribution systems for the business of independent grocery retailers.

We also employ a management information system that enables us to lower inbound transportation costs by making optimum use of our own fleet of trucks and/or by consolidating deliveries to achieve full truckloads.

Orders from multiple suppliers and multiple distribution centers are consolidated into single truckloads for efficient use of available capacity.

In addition, route efficiency software assists us in developing the most efficient routes for our outbound trucks.

As part of our “one company” approach, we have implemented a national planning and procurement system and are in the process of converting to a national warehouse management platform across the organization.

We continue to focus on the automation of certain of our distribution centers that are at different development stages.

These steps and others are intended to promote operational efficiencies and reduce operating expenses as a percentage of net sales.

Our Wholesale and Retail businesses operate in a highly competitive industry, which is characterized by low profit margins.

Our food distribution business competes with many traditional and specialty grocery wholesalers and retailers that maintain or develop self-distribution systems for the business of independent grocery retailers.

We also increasingly compete with deep discount retailers, limited assortment stores and wholesale membership clubs.

The primary competitive factors in the Wholesale business include price, service level, product quality, variety and other value-added services.

In recent years consolidation within the grocery industry has resulted in, and is expected to continue to result in, increased competition, including from some competitors that have greater financial, marketing and other resources than us.

The primary competitive factors in the Wholesale business include price, service level, product quality, variety, availability and other value-added services.

Independent retailers and smaller Chain customers represent a significant portion of our business and face intense competition from supercenters, deep discounters, mass merchandisers and rapidly growing alternative retail channels, such as dollar stores, discount supermarket chains, Internet-based retailers and meal-delivery services.

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and the quality, convenience, and consistency of service.

Strategies to react to competition vary based on many factors, such as the competitor’s format, strengths, weaknesses, pricing, and sales focus.

Competitive strategies vary based on many factors, such as the competitor’s format, strengths, weaknesses, pricing, and sales focus.

Our retail stores have continued to respond to growing competition from online and non-traditional retailers by adding options and services such as online ordering, curbside pick-up and home delivery.

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Our international business operations are subject to various laws and regulations regarding the import and export of products and preventing corruption and bribery (including the US Foreign Corrupt Practices Act).

We have implemented and continue to develop robust import/export and anti-corruption compliance programs and processes to comply with applicable laws and regulations governing our international business activities.

We have implemented and continue to develop import/export and anti-corruption compliance programs and processes to comply with applicable laws and regulations governing our international business activities.

Human Capital Management

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Through our UNFI Pride strategic pillar, we are striving to be an employer of choice.

We are focused on associate engagement, empowerment and safety that allow for innovation and bringing best-in-class solutions to our customers and suppliers in an ever changing retail landscape, including new ways of work scheduling and productivity investments.

We are focused on associate engagement, empowerment and safety to foster innovation and bring best-in-class solutions to our customers and suppliers in an ever-changing retail landscape, including new ways of work scheduling and productivity investments.

In fiscal 2021, we created Compensation Committee oversight for human capital management matters with a focus on associate wellbeing across a variety of measures.

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Attracting and retaining talent is one of our top priorities.

Our goal is to differentiate ourselves in the market by offering unprecedented flexibility to associates in the way, and when and how they work.

Our goal is to differentiate ourselves in the market by offering unprecedented flexibility to associates in the way, when and how they work.

To reduce turnover, we have an emphasized focus on and commitment to our associates, their experiences as well as their continued engagement.

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The Elevate program for Director-level and above associates, as well as the Operations Leadership Academy for leaders in our distribution centers, work to solidify our talent pipeline and promote the success of the organization’s future leaders.

In addition, we partner with key groups within the organization, such as Sales and Risk & Safety, to develop role-based training to drive greater productivity and safety.

Key groups, such as Sales and Risk & Safety, develop role-based training to drive greater productivity and safety.

We also offer associates additional learning and career development opportunities that extend from skills-based training deployed electronically through our BetterU learning system, to mentorship programs and career development discussions and beyond.

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Our compensation and benefits programs are designed to promote a culture of wellbeing and recognize our associates for their outstanding achievements and dedication to serving our customers and keeping them safe during even the most challenging of times.

We are committed to offering market competitive pay programs which reward high levels of performance, and behaviors that challenge convention and drive company success.

Our short-term incentive programs model the Company’s financial goals and are intended to align our eligible associates’ rewards with our financial success.

Long-term incentives, including restricted stock units and performance awards, are designed to attract and retain innovative leaders and align their financial interests with that of our shareholders and other stakeholders.

We are committed to offering market competitive pay programs that reward high levels of performance and behaviors that challenge convention and drive company success.

Our short-term incentive programs are tied to the Company’s financial goals and are intended to align our eligible associates’ rewards with our financial success.

Long-term incentives, including restricted stock units and performance stock unit awards, are designed to attract and retain innovative leaders and align their financial interests with that of our shareholders and other stakeholders.

As part of our commitment to recognize our associates’ “whole self” – health, finances and overall wellbeing – we offer a comprehensive health and welfare benefit program to eligible associates providing a variety of medical, dental and vision options plus additional voluntary benefits like long-term disability and optional life insurance.

Additionally, we provide to eligible associates a leading edge, no-cost wellness program, paid time off programs including paid parental leave, an employee assistance program, 401(k) plan, and a back-up childcare program.

Diversity and Inclusion

We pledge to promote equity, celebrate diversity, dismantle systemic racism and support justice and inclusion for all.

Our Board of Directors is diverse in gender and ethnic background, as well as having a broad range of experience, four out of ten directors are female, with two members identifying as African American and one member identifying as LGBTQ+.

Our Board of Directors is diverse in gender and ethnic background, as well as having a broad range of experience, with four out of 11 directors identifying as female, two members identifying as African American, one member identifying as Asian American and one member identifying as LGBTQ+.

We recognize that innovation thrives when there is unity and respect for diverse backgrounds and perspectives.

Additionally, we aim to foster a culture of belonging, equity and empathy through open dialogues, educational opportunities and by honoring the experiences and special events that speak to our associates’ many identities.

We built a diversity and inclusion team and created a diversity and inclusion strategy based on research, best practices and leadership commitment.

This strategy included hiring a Vice President of Diversity and Inclusion and establishing a diversity council which has taken an active role in advocating for and celebrating diversity and inclusion, as well as overseeing belonging and innovation groups.

We provided helpful diversity and inclusion information on our associate platforms including diversity and inclusion training.

Additionally, we launched UCount, a campaign to encourage associates to self-identify and rolled out Real Talk, a series of conversations on various dimensions of diversity.

We built a diversity and inclusion team, and our diversity and inclusion strategy is built on a foundation of research, best practices and leadership commitment.

Our Vice President of Diversity and Inclusion oversees our diversity and inclusion efforts and our diversity council takes an active role in advocating for and celebrating diversity and inclusion, as well as overseeing belonging and innovation groups.

We provide helpful diversity and inclusion information on our associate platforms including diversity and inclusion training.

Additionally, our UCount campaign encourages associates to self-identify and our Real Talk program offers a series of conversations on various dimensions of diversity.

Creating a Safe Environment

Safety is at the forefront of everything we do.

We continue to focus on the safety of our associates, customers and communities through the COVID-19 pandemic, with enhanced sanitation and increased safety measures.

We also have invested in several initiatives, including the development and implementation of a new safety brand and pledge, Every Moment Matters, that is designed to foster a caring culture, the implementation of interactive and proven training programs, which are rolled out across our network, and enhanced safety auditing.

Safety is one of our core values and a part of our Pride strategic pillar as we strive for zero injuries.

Generally, we do not experience any material seasonality.

However, our sales and operating results may vary significantly from quarter to quarter due to factors such as changes in our operating expenses, management’s ability to execute our operating and growth strategies, demand for our products, supply shortages and general economic conditions.

Our working capital needs are generally greater during the months leading up to high sales periods, such as the build up in inventory during the time period leading to the calendar year-end holidays.

We continue to focus on the safety of our associates, customers and communities with enhanced sanitation and increased safety measures.

We also have invested in several initiatives, including the development and implementation of a new safety brand and pledge, Every Moment Matters, that is designed to foster a caring culture, the implementation of interactive and proven training programs, which were rolled out across our network, and enhanced safety auditing.

In fiscal 2022, we created a new role and hired a new Senior Vice President, Occupational and Food Safety.

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.

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Our internet address is http://www.unfi.com.

The contents of our website are not part of this Annual Report, and our internet address is included in this document as an inactive textual reference only.

The contents of our website are not incorporated by reference into or considered to be part of this Annual Report, and our internet address is included in this document as an inactive textual reference only.

We make our Annual Report, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) available free of charge through our website as soon as reasonably practicable after we file such reports with, or furnish such reports to, the Securities and Exchange Commission.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business