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Item 7. Management’s Discussion and Analysis

2025-10-01 compared with 2024-10-01 · 270 added, 188 removed, 321 unchanged (59% of the section changed)

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The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements and the notes thereto, “Risk Factors” included in Part I, Item IA, “Cautionary Note Regarding Forward-Looking Statements” and other risks described elsewhere in this Annual Report.

The following includes a comparison of our consolidated results of operations, our segment results and financial position for fiscal years 2024 and 2023.

For a comparison of our consolidated results of operations, segment results and financial position for fiscal years 2023 and 2022, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in our Annual Report on Form 10-K for the fiscal year ended July 29, 2023, filed with the Securities and Exchange Commission on September 26, 2023.

The following includes a comparison of our consolidated results of operations, segment results and financial position for fiscal years 2025 and 2024.

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 16—Business Segments in Part II, Item 8 of this Annual Report.

For a comparison of our consolidated results of operations and financial position for fiscal years 2024 and 2023, see Item 7 of Part II, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, in our Annual Report on Form 10-K for the fiscal year ended August 3, 2024, filed with the Securities and Exchange Commission on October 1, 2024, as supplemented by the additional discussion below, which includes a comparison of our segment results for fiscal years 2024 and 2023 reflecting our updated segments.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

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• 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 develop, implement, operate and maintain, and rely on third parties to operate and maintain, reliable and secure technology systems, and the effectiveness of our business continuity plans in response to an incident impacting our technology systems, such as the unauthorized incident on our technology systems;

• labor and other workforce shortages and challenges;

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

• our ability to maintain sufficient volume in our wholesale distribution and services businesses to support our operating infrastructure;

• our ability to maintain sufficient volume in our Natural and Conventional businesses to support our operating infrastructure;

• our ability to access additional capital;

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• the potential for additional asset impairment charges;

• our sensitivity to general economic conditions including inflation, changes in disposable income levels and consumer purchasing habits;

• our sensitivity to general economic conditions including inflation, tariff policy and changes in disposable income levels and 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 shortages or work stoppages or otherwise;

• the effect of adverse decisions in, or settlement of, litigation or other proceedings to which we are subject;

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

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

• changes in tax laws and regulations, and actions by federal, state and local taxing authorities related to the interpretation and application of such tax laws and regulations;

• our ability to maintain food quality and safety;

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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 believe we are uniquely positioned to provide the broadest array of products, programs 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 retailers.

We offer approximately 230,000 products consisting of national, regional and private label brands grouped into the following main product categories:

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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 becoming a more effective and efficient business partner to our customers, which we believe will position us for long-term profitable growth.

We have undertaken a new strategy and have established new three-year financial objectives that begin in fiscal 2025 and are designed to make us more efficient while improving free cash flow generation and reducing net leverage.

Our business is classified into three reportable segments:

Natural, Conventional and Retail.

We are executing against the strategy we introduced in October 2024 and three-year financial objectives that seek to add value to our customers and suppliers through our portfolio of products, programs, insights and services while improving our effectiveness, efficiency and cash flow.

To accomplish the latter, we are focused on controllable variables in four key areas:

intensifying and expanding our network optimization;

reducing annual capital spending;

optimizing our cost structure;

and reducing our net working capital position.

Our strategy includes the areas of focus detailed under “Business” included in Part 1, Item 1 of this Annual Report.

During fiscal 2024, we continued to implement near-term initiatives to help improve profitability and strengthen our foundation while we finalized and began implementing our revised strategy.

In the second quarter of fiscal 2025, we began realigning our commercial wholesale organization into two product-centered business divisions, Conventional Grocery Products (“Conventional”) and Natural, Organic, Specialty & Fresh Products (“Natural”), to enhance service to customers and suppliers through more customized, product- and service-focused commercial teams.

In addition, capability centers of excellence in areas such as supply chain, professional and digital services, and private brands work across the divisions to help create customized programs to help customers and suppliers accelerate their growth strategies.

In the fourth quarter of fiscal 2025, we restructured our internal financial reporting and management processes to align with the new divisional structure.

Our new external reporting structure provides insight into each division’s performance in line with how the business is now managed.

We expect to continue to use available capital to re-invest in our business and are committed to improving our free cash flow and financial leverage while reducing outstanding debt.

We believe we can optimize our performance and profitability through our improvement 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.

Our largest customer accounted for more than 10% of our Net sales in fiscal 2024.

On May 21, 2024, we amended and restated our distribution agreement with this customer which, among other things, extended the term of that agreement through May 20, 2032.

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.

economy has experienced economic volatility in recent years, which has had, and we expect may continue to have, an impact on consumer confidence and behavior.

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.

Our results are impacted by macroeconomic and demographic trends, changes in the food distribution market structure and changes in consumer behavior, which may result from factors beyond our control, including geopolitical events and other events that may trigger economic volatility and negatively impact discretionary income levels and consumer confidence, social trends, changes in the levels of disposable income and the health of the economy in which our customers and stores operate.

economy continues to experience economic volatility, which has had, and we expect may continue to have, an impact on consumer confidence and behavior.

Consumer spending may continue to be impacted by levels of discretionary income with consumers trading down to a less expensive mix of products for grocery items or buying fewer items.

In addition, inflation continues to affect our 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.

We are actively monitoring the impacts of the evolving macroeconomic and geopolitical landscape, including rapidly evolving tariff and global trade policies, on all aspects of our business.

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.

Additionally, in the fourth quarter of fiscal 2025, we became aware of unauthorized activity on certain of our information technology systems.

We promptly activated our incident response plan and implemented containment measures, including proactively taking certain systems offline (the “Cybersecurity Incident”, as discussed in Part I, Item 1C of this Annual Report).

As a result, our ability to fulfill and distribute customer orders was temporarily impacted until the unauthorized activity could be contained, and we could safely restore the core systems that our customers and suppliers use, enabling business operations to normalize.

As a result of the Cybersecurity Incident, we experienced reduced sales volume and increased operational costs in the fourth quarter of fiscal 2025, which negatively impacted our results of operations.

We incurred incremental costs of approximately $26 million in the fourth quarter of fiscal 2025 as a result of the Cybersecurity Incident.

These costs related to services provided to investigate and remediate the Cybersecurity Incident, such as third-party cybersecurity, legal and governance experts, as well as increased operating costs from the resulting disruption to our business operations.

We have submitted, and intend to continue to submit, claims to our insurers for reimbursement of some of the costs, expenses, and losses stemming from the Cybersecurity Incident and expect that the full claim and settlement process will extend throughout fiscal 2026.

Wholesale Distribution Network Optimization

We are making initial strides towards our network optimization goal by streamlining our distribution center network to create a more efficient supply chain and reduce capital intensity.

Subsequent to the fourth quarter of fiscal 2024, we began the consolidation of the volume of two distribution centers in the upper Midwest and their related off-site storage facilities into other facilities in the Central region.

We expect to achieve synergies and cost savings as a result of these efforts through eliminating inefficiencies, including incurring lower operating, shrink and off-site storage expenses.

In the second quarter of fiscal 2024, we began the development of our new Manchester, Pennsylvania distribution center, which has approximately 1.3 million square feet.

We recognized a $205 million right-of-use asset and operating lease liability for this distribution center in fiscal 2024.

Subsequent to the fourth quarter of fiscal 2024, in September 2024, we began operating this facility, and we expect to begin consolidating volume from other nearby distribution centers in the East region into this new distribution center in fiscal 2025.

We are working to optimize our distribution center network to better and more efficiently service customers and suppliers.

In the first quarter of fiscal 2025, we consolidated the volume of two distribution centers into other facilities in the Central region.

In the second quarter of fiscal 2025, we announced the closure of a third distribution center in the Central region, which was completed in the third quarter of fiscal 2025.

We expect to achieve cost savings as a result of these efforts through streamlining operations and delivering efficiencies, including incurring lower operating and shrink expenses, while also improving product assortment and overall customer experience.

In the fourth quarter of fiscal 2025, we came to a mutual agreement with a customer in the East region to terminate our supply agreement, pursuant to which we served as the primary grocery wholesaler to this customer’s locations in the Northeast.

In connection with this termination, we ceased operations at our Allentown, Pennsylvania distribution center in early fiscal 2026 with the remaining volume consolidated into other facilities in the Northeast.

Business with this customer in the Northeast accounted for approximately $1 billion in annual sales.

The termination enables us to accelerate progress toward our longer-term strategic and three-year financial objectives.

In the first quarter of fiscal 2025, we began operating a new distribution center in Manchester, Pennsylvania, which has approximately 1.3 million square feet, optimizes volume from the other nearby distribution centers in the East region and primarily distributes natural products.

In the third quarter of fiscal 2025, we implemented a full case automation system at the Manchester distribution center and are increasing the volume that utilizes this new solution.

Also in the first quarter of fiscal 2025, we began the development of a new automated distribution center in Sarasota, Florida, which has approximately 1.0 million square feet, replaces a smaller legacy distribution center and primarily distributes natural products.

We recognized a $118 million right-of-use asset and operating lease liability for this distribution center in the first quarter of fiscal 2025.

We began operations in this facility in the fourth quarter of fiscal 2025, with volume expanding at the beginning of fiscal 2026.

We plan to continue to evaluate our distribution center network to further optimize performance and expect to incur incremental expenses related to any future network realignment, expansion or improvements, including network optimization and automation initiatives.

We are working to both minimize these potential future costs and obtain new business to further improve the efficiency of our transforming distribution network.

We are working to both minimize future costs and obtain new business to further improve the efficiency of our distribution network.

Retail Operations

We currently operate 76 retail grocery stores, including 54 Cub Foods corporate stores and 22 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 24 “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.

We operated 75 grocery stores, including 54 Cub Foods stores and 21 Shoppers stores, as of August 2, 2025.

In addition, we supplied another 26 Cub Foods stores operated by our wholesale customers through franchise and minority equity ownership arrangements.

We operated 80 pharmacies primarily within the stores we operate and the stores of our franchisees.

In addition, we operated 24 “Cub Wine and Spirit” and “Cub Liquor” stores.

We plan to continue to invest in and optimize our Retail segment in areas such as customer-facing merchandising initiatives, physical facilities, technology and operational tools.

Impact of Product Cost Changes

We experienced a mix of inflation and deflation across product categories during fiscal 2024.

In the aggregate across our businesses, including the mix of products, management estimates our businesses experienced product cost inflation of approximately one percent in fiscal 2024 as compared to fiscal 2023.

Cost inflation and deflation estimates are based on individual like items sold during the periods being compared.

We experienced a mix of inflation across product categories during fiscal 2025.

In the aggregate across our businesses, including the mix of products, management estimates our businesses experienced product cost inflation of approximately two percent in fiscal 2025 as compared to fiscal 2024.

Cost inflation estimates are based on individual like items sold during the periods being compared.

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 customers.

Changes in merchandising, customer buying habits and competitive pressures create inherent difficulties in measuring the impact of inflation and deflation 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.

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, mix of units sold and vendor promotions are constant.

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.

In fiscal 2025, we experienced fewer and less significant vendor product cost increases as compared to fiscal 2024.

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Cost of Sales and Gross 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.

Operating Expenses

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Restructuring, Acquisition and Integration Related Expenses

Restructuring, acquisition and integration related expenses reflect expenses resulting from restructuring activities, including severance costs, share-based compensation acceleration charges and acquisition and integration related expenses.

Restructuring, acquisition and integration related expenses reflect expenses resulting from restructuring activities, including severance costs, facility closure costs, contract exit-related 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.

Loss on Sale of Assets and Other Asset Charges

Loss 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

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Loss on sale of assets and other asset charges 42 57 (15)

Operating income 8 120 (112)

Operating (loss) income (31) 8 (39)

Net periodic benefit income, excluding service cost (20) (15) (5)

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Other income, net (3) (2) (1)

(Loss) income before income taxes (137) 7 (144)

Loss before income taxes (154) (137) (17)

Benefit for income taxes

Net (loss) income including noncontrolling interests (110) 30 (140)

(39) (27) (12)

Net loss including noncontrolling interests (115) (110) (5)

Less net income attributable to noncontrolling interests (3) (2) (1)

Net (loss) income attributable to United Natural Foods, Inc.

Net loss attributable to United Natural Foods, Inc.

$ (118) $ (112) $ (6)

Adjusted EBITDA $ 552 $ 518 $ 34

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

The following table reconciles Net loss including noncontrolling interests to Adjusted EBITDA.

(in millions) 2025

Net (loss) income including noncontrolling interests $ (110) $ 30

Adjustments to net (loss) income including noncontrolling interests:

Net loss including noncontrolling interests $ (115) $ (110)

Adjustments to net loss including noncontrolling interests:

Less net income attributable to noncontrolling interests (3) (2)

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Share-based compensation 43 37

LIFO charge 7 119

LIFO (benefit) charge (2) 7

Restructuring, acquisition and integration related expenses (1)

Loss on sale of assets and other asset charges (2)

Multiemployer pension plan withdrawal charges (3)

Other retail expense (4)

Business transformation costs (3)

Cybersecurity incident (4)

Other adjustments (5)

Adjusted EBITDA $ 552 $ 518

(1) Fiscal 2024 and fiscal 2023 primarily reflects costs associated with certain employee severance.

(2) Fiscal 2024 primarily includes a $21 million non-cash asset impairment charge related to one of our corporate-owned office locations in the first quarter of fiscal 2024, a $7 million non-cash asset impairment charge related to the decision to close certain retail store locations in the third quarter of fiscal 2024, a $15 million non-cash impairment charge related to the decision to close certain leased and owned distribution center locations in the fourth quarter of fiscal 2024 and $21 million in losses on the sales of receivables under the accounts receivable monetization program.

Fiscal 2023 primarily includes a $25 million intangible asset impairment charge attributable to a rationalization of our brands portfolio in an effort to focus on our core private brand offerings and $14 million in losses on the sales of receivables .

Refer to Note 3—Revenue Recognition, Note 5—Property and Equipment, Net and Note 6—Goodwill and Intangible Assets, Net in Part II, Item 8 of this Annual Report for additional information.

(3) Fiscal 2023 reflects adjustments to multiemployer pension plan withdrawal charge estimates.

(4) Fiscal 2023 reflects store closure costs, operational wind-down and inventory charges.

(5) Reflects costs associated with business transformation initiatives, primarily including third-party consulting costs and licensing costs, and third-party professional service fees related to the board-led financial review in fiscal 2024, all of which are included within Operating expenses in the Consolidated Statements of Operations.

(6) Primarily reflects third-party professional service fees related to shareholder negotiations in the first quarter of fiscal 2024.

(1) Fiscal 2025 primarily reflects the $53 million charge related to the Company’s termination of its supply agreement with a customer in the East region and costs associated with certain employee severance and other employee separation costs and outsourcing certain corporate functions under restructuring initiatives.

Fiscal 2024 primarily reflects costs associated with certain employee severance and other employee separation costs.

(2) Fiscal 2025 primarily includes a $24 million non-cash asset impairment charge related to a distribution center in our East region and $19 million in losses on the sales of receivables under the accounts receivable monetization program.

Fiscal 2024 primarily includes a $21 million non-cash asset impairment charge related to one of our corporate-owned office locations, a $7 million non-cash asset impairment charge related to the decision to close certain retail store locations, a $15 million non-cash impairment charge related to the decision to close certain leased and owned distribution center locations and $21 million in losses on the sales of receivables under the accounts receivable monetization program.

Refer to Note 3—Revenue Recognition and Note 5—Property and Equipment, Net in Part II, Item 8 of this Annual Report for additional information.

(3) Reflects costs associated with business transformation initiatives, primarily including third-party consulting costs and licensing costs, and third-party professional service fees related to strategic initiatives and the board-led financial review in fiscal 2024, all of which are included within Operating expenses in the Consolidated Statements of Operations.

(4) Reflects costs and charges related to the Cybersecurity Incident, primarily including shrink and remediation costs related to third-party cybersecurity, legal and governance experts, of which $15 million are included within Gross profit and $11 million are included within Operating expenses in the Consolidated Statements of Operations.

(5) Fiscal 2025 primarily reflects certain accrued legal-related costs, which are included within Operating expenses in the Consolidated Statements of Operations.

Fiscal 2024 primarily reflects third-party professional service fees related to shareholder negotiations, which are included within Operating expenses in the Consolidated Statements of Operations.

Within the following results of operations, we have estimated the impact of the additional week in fiscal 2024, where applicable and estimable, to provide more comparable financial results on a year-over-year basis.

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RESULTS OF OPERATIONS

Fiscal year ended August 3, 2024 (fiscal 2024) compared to fiscal year ended July 29, 2023 (fiscal 2023)

The following table sets forth our Net sales by customer channel.

Fiscal year ended August 2, 2025 (fiscal 2025) compared to fiscal year ended August 3, 2024 (fiscal 2024)

The following table sets forth our Net sales by segment.

Refer to Note 16—Business Segments in Part II, Item 8 of this Annual Report for additional information.

Within the following table, we have estimated the impact of the additional 53rd week in fiscal 2024 to provide more comparable financial results on a year-over-year basis.

(in millions except percentages) 2024

(53rd week estimated impact) 2024

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Comparable 52-Week Increase (Decrease) (1)

Customer Channel (1)

Chains $ 12,967 $ 245 $ 12,722 $ 12,816 $ (94) (0.7) %

Independent retailers 7,605 141 7,464 7,699 (235) (3.1) %

Supernatural 6,941 133 6,808 6,374 434 6.8 %

(in millions except percentages) $ %

Natural $ 16,017 $ 14,948 $ 280 $ 14,668 $ 1,349 9.2 %

Conventional 14,667 14,946 280 14,666 1 — %

Retail 2,342 2,436 45 2,391 (49) (2.0) %

Other 2,555 44 2,511 2,477 34 1.4 %

Eliminations (1,242) (1,350) (23) (1,327) 85 (6.4) %

Total Net sales $ 31,784 $ 30,980 $ 582 $ 30,398 $ 1,386 4.6 %

(1) Refer to Note 3—Revenue Recognition in Part II, Item 8 of this Annual Report for our channel definitions and additional information.

(1) Excludes the estimated impact of the 53rd week in fiscal 2024.

Our Net sales for fiscal 2024 increased $708 million, or 2.3%, to $31.0 billion in fiscal 2024, from $30.3 billion in fiscal 2023.

The 53rd week in fiscal 2024 contributed an estimated $582 million to Net sales.

Excluding the impact of the 53rd week, Net sales were $30.4 billion, an increase of approximately 0.4% from fiscal 2023.

The increase in Net sales was primarily driven by inflation and new business with existing customers.

These increases were partially offset by a decline in unit volumes.

Retail Net sales decreased $44 million in fiscal 2024 as compared to fiscal 2023.

The 53rd week in fiscal 2024 contributed an estimated $45 million to Retail Net sales.

Excluding the impact of the 53rd week, Retail Net sales decreased $89 million, or 3.6%, primarily due to lower volume and store closures.

Identical store sales decreased 3.7%.

Our Net sales for fiscal 2025 increased $804 million, or 2.6%, to $31.8 billion in fiscal 2025, from $31.0 billion in fiscal 2024, which included an estimated $582 million benefit from the 53rd week.

Net sales increased approximately 4.6% when excluding the impact of the 53rd week in fiscal 2024.

The increase in Net sales was primarily driven by an increase in Natural unit volumes, including new business with existing and new customers, as well as inflation.

Net sales were adversely impacted by an estimated $400 million in lost sales related to the Cybersecurity Incident in fiscal 2025.

Natural Net sales increased $1,069, or 7.2%, to $16.0 billion in fiscal 2025, from $14.9 billion in fiscal 2024, which included an estimated $280 million benefit from the 53rd week.

Natural Net sales increased approximately 9.2% when excluding the impact from the 53rd week in fiscal 2024.

The increase in Natural Net sales, excluding the 53rd week, was primarily driven by an increase in unit volumes, including new business with existing and new customers, as well as inflation.

Conventional Net sales decreased $279 million, or 1.9%, to $14.7 billion in fiscal 2025, from $14.9 billion in fiscal 2024, which included an estimated $280 million benefit from the 53rd week.

Conventional Net sales were approximately flat to fiscal 2024, when excluding the impact from the 53rd week in fiscal 2024, due to increases from inflation and new business with existing customers, which were largely offset by a decline in unit volumes.

Retail Net sales decreased $94 million, or 3.9%, to $2.3 billion in fiscal 2025, from $2.4 billion in fiscal 2024, which included an estimated $45 million benefit from the 53rd week.

Retail Net sales decreased approximately 2.0% when excluding the impact from the 53rd week in fiscal 2024.

The decrease in Retail Net sales was primarily driven by a 0.6% decrease in identical store sales from lower volume, and store closures.

Lower eliminations of Net sales for fiscal 2025 as compared to fiscal 2024 were primarily due to a decrease in Conventional to Retail sales, which are eliminated upon consolidation.

Cost of Sales and Gross Profit

Our Gross profit increased $21 million, or 0.5%, to $4,222 million in fiscal 2025, from $4,201 million in fiscal 2024.

Gross profit increased by $82 million from the estimated impact of the 53rd week in fiscal 2024.

Our Gross profit as a percentage of Net sales was 13.6% in fiscal 2024, which was approximately flat compared to fiscal 2023.

The LIFO charge was $7 million and $119 million in fiscal 2024 and fiscal 2023, respectively.

Excluding the non-cash LIFO charge, gross profit rate was 13.6% of Net sales and 14.0% of Net sales for fiscal 2024 and fiscal 2023, respectively.

The remaining decrease in gross profit rate of 46 basis points was primarily driven by lower levels of procurement gains resulting from decelerating inflation and a lower retail gross profit rate, which were partially offset by the benefit of lower shrink expense.

The 53rd week in fiscal 2024 contributed an estimated $82 million to Gross profit in fiscal 2024.

Our Gross profit as a percentage of Net sales decreased to 13.3% in fiscal 2025 compared to 13.6% in fiscal 2024.

The decrease in gross profit rate of 28 basis points was primarily driven by lower product margin rates and customer and product mix, which were partially offset through supplier programs and the benefit of lower shrink expense.

The reduction in shrink expense was compressed due to the adverse impact of the Cybersecurity Incident in fiscal 2025.

Operating Expenses

Operating expenses increased $17 million, or 0.4%, to $4,117 million, or 13.0% of Net sales, in fiscal 2025 compared to $4,100 million, or 13.2% of Net sales, in fiscal 2024.

Operating expenses increased by $78 million from the estimated impact of the 53rd week in fiscal 2024.

The increase in Operating expenses as a percentage of Net sales was primarily driven by approximately $49 million higher incentive compensation expense in fiscal 2024 and incremental transformation costs, which were partially offset by lower transportation costs and other operational supply chain efficiencies.

The 53rd week in fiscal 2024 contributed an estimated $78 million to Operating expenses in fiscal 2024.

The decrease in Operating expenses as a percentage of Net sales was primarily driven by benefits from cost saving initiatives and the leveraging impact of higher sales, partially offset by higher costs associated with occupancy, union and other employee benefits and costs related to the Cybersecurity Incident in fiscal 2025.

Restructuring, Acquisition and Integration Related Expenses

Restructuring, acquisition and integration related expenses were $36 million for fiscal 2024, compared to $8 million for fiscal 2023.

The increase was primarily driven by costs associated with certain employee severance and other employee separation costs in fiscal 2024.

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

Loss on sale of assets and other asset charges increased $27 million to $57 million for fiscal 2024, from $30 million for fiscal 2023.

The increase in fiscal 2024 was primarily driven by higher asset impairment charges and losses on the sales of receivables under the accounts receivable monetization program, which was entered into early in the second quarter of fiscal 2023.

Fiscal 2024 primarily includes $43 million in asset impairment charges related to one of our corporate-owned office locations, certain leased and owned distribution centers and certain retail store locations and $21 million in losses on the sales of receivables.

Fiscal 2023 primarily included a $25 million intangible asset impairment charge related to a rationalization of our brands portfolio and $14 million in losses on the sales of receivables.

Operating Income

Reflecting the factors described above, Operating income decreased $112 million to $8 million for fiscal 2024, from $120 million in fiscal 2023.

The decrease in Operating income was primarily driven by an increase in Operating expenses, an increase in Restructuring, acquisition and integration related expenses and an increase in Loss on sale of assets and other asset charges, partially offset by an increase in Gross profit.

Restructuring, acquisition and integration related expenses increased $58 million to $94 million for fiscal 2025, from $36 million for fiscal 2024.

The increase was primarily driven by the $53 million charge related to the Company’s termination of its supply agreement with a customer in the East region, increased costs associated with outsourcing certain corporate functions under restructuring initiatives and higher closed property charges and costs, partially offset by a decrease in certain employee severance and other employee separation costs.

Loss on Sale of Assets and Other Asset Charges

Loss on sale of assets and other asset charges decreased $15 million to $42 million for fiscal 2025, from $57 million for fiscal 2024.

The decrease in fiscal 2025 was primarily driven by lower asset impairment charges.

Fiscal 2025 primarily included a $24 million asset impairment charge related to our Allentown, Pennsylvania distribution center and $19 million in losses on the sales of receivables.

Fiscal 2024 primarily included $43 million in asset impairment charges related to one of our corporate-owned office locations, certain leased and owned distribution centers and certain retail store locations and $21 million in losses on the sales of receivables.

Operating (Loss) Income

Reflecting the factors described above, Operating loss was $31 million for fiscal 2025, a $39 million decrease from Operating income of $8 million in fiscal 2024.

The decrease was primarily driven by an increase in Restructuring, acquisition and integration related expenses and Operating expenses, partially offset by an increase in Gross profit and a decrease in Loss on sale of assets and other asset charges, each as described above.

Net Periodic Benefit Income, Excluding Service Cost

Net periodic benefit income, excluding service cost decreased $14 million to $15 million in fiscal 2024, from $29 million in fiscal 2023.

The decrease in Net periodic benefit income, excluding service cost was primarily driven by higher interest costs from a higher discount rate utilized in the measurement of pension liabilities and $3 million of lower income from expected returns on plan assets.

Net periodic benefit income, excluding service cost increased $5 million to $20 million in fiscal 2025, from $15 million in fiscal 2024.

The increase in Net periodic benefit income, excluding service cost was primarily driven by lower interest costs from a lower discount rate utilized in the measurement of pension liabilities.

Interest Expense, Net

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Interest expense, net $ 146 $ 162 $ (16)

The increase in Interest expense, net for fiscal 2024 compared to fiscal 2023 was primarily driven by higher average interest rates, an increase in losses on debt extinguishment, and an estimated $3 million impact from the 53rd week in fiscal 2024.

(Benefit) Provision for Income Taxes

The effective tax rate was a benefit rate of 19.7% on a pre-tax loss for fiscal 2024 compared to a benefit rate of 328.6% on pre-tax income for fiscal 2023.

The decrease in Interest expense, net for fiscal 2025 compared to fiscal 2024 includes an estimated $3 million impact from the 53rd week in fiscal 2024.

The remaining decrease was primarily driven by lower outstanding long-term debt balances and lower losses on debt extinguishment.

Benefit for Income Taxes

The effective tax rate was a benefit rate of 25.3% on a pre-tax loss for fiscal 2025 compared to a benefit rate of 19.7% on a pre-tax loss for fiscal 2024.

For fiscal 2025, the effective tax rate was impacted by the establishment of valuation allowances against deferred tax assets with limited lives resulting from the One, Big, Beautiful Bill Act (“OBBBA”), partially offset by the tax credit impact of a fiscal 2025 investment in an equity method partnership.

For fiscal 2024, the effective tax rate was impacted by non-deductible share-based compensation and the establishment of valuation allowances against deferred tax assets with limited lives.

For fiscal 2023, the effective tax rate was impacted by solar credits, including the tax credit impact of a fiscal 2023 investment in an equity method partnership and solar credits associated with a solar array installation at our Howell Township, New Jersey facility.

The effective tax rate was also impacted by the recognition of previously unrecognized tax benefits and excess tax deductions attributable to share-based compensation.

The combined impact of these fiscal 2023 tax benefits exceeded pre-tax income, generating an overall tax benefit rate for fiscal 2023.

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

Net Loss Attributable to United Natural Foods, Inc.

Reflecting the factors described in more detail above, Net loss attributable to United Natural Foods, Inc.

was $112 million, or $1.89 per diluted common share, for fiscal 2024, compared to Net income attributable to United Natural Foods, Inc.

was $118 million, or $1.95 per diluted common share, for fiscal 2025, compared to Net loss attributable to United Natural Foods, Inc.

of $112 million, or $1.89 per diluted common share, for fiscal 2024.

Segment Results of Operations

The following tables set forth Net sales and Adjusted EBITDA by segment for the periods indicated.

Adjusted EBITDA

The following table sets forth Adjusted EBITDA by segment for the periods indicated.

Refer to Note 16—Business Segments in Part II, Item 8 of this Annual Report for additional information.

As a result of the Cybersecurity Incident, we experienced reduced sales volume as described above, which is estimated to have adversely impacted our Adjusted EBITDA results in fiscal 2025 by approximately $50 million.

(in millions) 2025

Increase (Decrease)

Wholesale $ 29,853 $ 29,142 $ 711

Natural $ 442 $ 350 $ 92

Conventional 174 219 (45)

Retail 6 8 (2)

Other 215 224 (9)

Corporate and Other (70) (59) (11)

Total Adjusted EBITDA (1)

$ 552 $ 518 $ 34

(1) Fiscal 2024 Adjusted EBITDA included an approximate $10 million benefit from the additional week.

The estimated contribution from the additional week is calculated by taking one-fifth of Adjusted EBITDA for the last five-week period within the fourth quarter of fiscal 2024.

Natural Adjusted EBITDA increased 26.3% for fiscal 2025 as compared to fiscal 2024.

The increase was driven by an increase in gross profit, partially offset by an increase in operating expenses.

• Natural Gross profit, which excludes the LIFO (benefit) charge and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, increased $104 million.

The 53rd week in fiscal 2024 contributed an estimated $38 million to Natural Gross profit in fiscal 2024.

Natural gross profit rate decreased approximately 25 basis points primarily driven by lower product margin rates and customer and product mix, which were partially offset through supplier programs and the benefit of lower shrink expense.

• Natural Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, increased $12 million.

The 53rd week in fiscal 2024 contributed an estimated $32 million to Natural Operating expense in fiscal 2024.

Natural operating expense rate decreased approximately 67 basis points primarily due to benefits from cost saving initiatives and the leveraging impact of higher sales, partially offset by higher rent and other occupancy costs primarily resulting from new leased distribution centers.

Conventional Adjusted EBITDA decreased 20.5% for fiscal 2025 as compared to fiscal 2024.

The decrease was driven by a decrease in gross profit, partially offset by a decrease in operating expenses.

• Conventional Gross profit, which excludes the LIFO (benefit) charge and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, decreased $48 million.

The 53rd week in fiscal 2024 contributed an estimated $29 million to Conventional Gross profit in fiscal 2024.

Conventional gross profit rate decreased approximately 13 basis points primarily driven by recoveries from vendors related to legal settlements in fiscal 2024 and lower product margin rates, which were partially offset through supplier programs and the benefit of lower shrink expense.

• Conventional Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, decreased $3 million.

The 53rd week in fiscal 2024 contributed an estimated $25 million to Conventional Operating expense in fiscal 2024.

Conventional operating expense rate increased approximately 15 basis points primarily due to higher costs associated with union and other employee benefits, transportation fleet and maintenance, and insurance, all of which were partially offset by benefits from cost saving initiatives.

Retail Adjusted EBITDA decreased $2 million to $6 million for fiscal 2025 as compared to fiscal 2024.

• Retail Gross profit, which excludes the LIFO (benefit) charge and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, decreased $25 million.

The 53rd week in fiscal 2024 contributed an estimated $11 million to Retail Gross profit in fiscal 2024.

Retail gross profit rate was approximately flat to fiscal 2024, while dollars decreased primarily due to lower sales volume and store closures, offset by a reduction in shrink.

• Retail Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, decreased $23 million.

The 53rd week in fiscal 2024 contributed an estimated $11 million to Retail Operating expense in fiscal 2024.

Retail operating expense rate was approximately flat to fiscal 2024 primarily driven by the deleveraging impact of lower sales and increases in labor costs, offset by operating efficiencies and lower costs from store closures.

Fiscal year ended August 3, 2024 (fiscal 2024) compared to fiscal year ended July 29, 2023 (fiscal 2023)

The updates to our segment reporting structure resulted in a recast of prior period financial information to conform with current period presentation, and as a result the following reflects an updated segment results discussion for fiscal 2024 compared to fiscal 2023.

The following table sets forth our Net sales by segment.

Refer to Note 16—Business Segments in Part II, Item 8 of this Annual Report for additional information.

Within the following table, we have estimated the impact of the additional 53rd week in fiscal 2024 to provide more comparable financial results on a year-over-year basis.

(53rd week estimated impact) 2024

(52 weeks) (1)

(52 weeks) Comparable 52-Week Increase (Decrease) (1)

(in millions except percentages) $ %

Natural $ 14,948 $ 280 $ 14,668 $ 14,164 $ 504 3.6 %

Conventional 14,946 280 14,666 15,029 (363) (2.4) %

Retail 2,436 45 2,391 2,480 (89) (3.6) %

Eliminations (1,350) (23) (1,327) (1,401) 74 (5.3) %

Total Net sales $ 30,980 $ 582 $ 30,398 $ 30,272 $ 126 0.4 %

(1) Excludes the estimated impact of the 53rd week in fiscal 2024.

Natural Net sales increased $784 million, or 5.5%, to $14.9 billion in fiscal 2024, from $14.2 billion in fiscal 2023.

The 53rd week in fiscal 2024 contributed an estimated $280 million to Natural Net sales.

Excluding the impact of the 53rd week, Natural Net sales were $14.7 billion, an increase of approximately 3.6% from fiscal 2023.

The increase in Natural Net sales was primarily driven by inflation and new business with existing customers.

These increases were partially offset by a decline in unit volumes.

Conventional Net sales decreased $83 million, or 0.6%, to $14.9 billion in fiscal 2024, from $15.0 billion in fiscal 2023.

The 53rd week in fiscal 2024 contributed an estimated $280 million to Conventional Net sales.

Excluding the impact of the 53rd week, Conventional Net sales were $14.7 billion, a decrease of approximately 2.4% from fiscal 2023.

The decrease in Conventional Net sales was primarily driven by a decline in unit volumes, which was partially offset by inflation and new business with existing customers.

Retail Net sales decreased $44 million, or 1.8%, to $2.4 billion in fiscal 2024, from $2.5 billion in fiscal 2023.

The 53rd week in fiscal 2024 contributed an estimated $45 million to Retail Net sales.

Excluding the impact of the 53rd week, Retail Net sales decreased approximately 3.6%, primarily due to lower volume and store closures.

Identical store sales decreased 3.7%.

Lower eliminations of Net sales for fiscal 2024 as compared to fiscal 2023 were primarily due to a decrease in Conventional to Retail sales, which are eliminated upon consolidation.

Adjusted EBITDA

Wholesale $ 476 $ 540 $ (64)

The following table sets forth Adjusted EBITDA by segment for the periods indicated.

Refer to Note 16—Business Segments in Part II, Item 8 of this Annual Report for additional information.

(in millions) 2024

Increase (Decrease)

Natural $ 350 $ 328 $ 22

Conventional 219 301 (82)

Retail 8 72 (64)

Other 30 31 (1)

Eliminations 4 (1) 5

Corporate and Other (59) (61) 2

Total Adjusted EBITDA (1)

Wholesale Net sales increased $152 million in fiscal 2024 as compared to fiscal 2023, excluding an estimated $559 million benefit from the 53rd week in fiscal 2024.

The increase in Wholesale Net sales, excluding the 53rd week, was primarily driven by inflation and new business with existing customers.

These increases were partially offset by a decline in unit volumes, as discussed in Results of Operations - Fiscal year ended August 3, 2024 (fiscal 2024) compared to fiscal year ended July 29, 2023 (fiscal 2023) - Net Sales section above.

Retail Net sales decreased $89 million, or 3.6%, in fiscal 2024 as compared to fiscal 2023, excluding an estimated benefit of $45 million from the 53rd week in fiscal 2024.

The decrease in Retail Net sales, excluding the 53rd week, was primarily due to lower volume and store closures.

Identical store sales decreased 3.7%.

Lower eliminations of Net sales for fiscal 2024 as compared to fiscal 2023 were primarily due to a decrease in Wholesale to Retail sales, which are eliminated upon consolidation.

Adjusted EBITDA

Wholesale Adjusted EBITDA decreased 11.9% for fiscal 2024 as compared to fiscal 2023.

The decrease was driven by an increase in operating expenses, partially offset by an increase in gross profit excluding the LIFO charge.

Wholesale Gross profit excluding the LIFO charge for fiscal 2024 decreased $57 million, when excluding an estimated $67 million benefit from the 53rd week in fiscal 2024.

Wholesale gross profit rate decreased approximately 26 basis points primarily driven by lower levels of procurement gains resulting from decelerating inflation, partially offset by lower shrink expense.

Wholesale Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, increased $15 million when excluding an estimated $59 million impact from the 53rd week in fiscal 2024.

Wholesale operating expense rate was approximately flat to fiscal 2023 primarily driven by higher incentive compensation expense, offset by lower transportation costs and other operational supply chain efficiencies.

Wholesale depreciation and amortization expense increased $4 million for fiscal 2024 compared to fiscal 2023, when excluding an estimated $5 million in additional expense from the 53rd week in fiscal 2024.

$ 518 $ 640 $ (122)

(1) Fiscal 2024 Adjusted EBITDA included an approximate $10 million benefit from the additional week.

The estimated contribution from the additional week is calculated by taking one-fifth of Adjusted EBITDA for the last five-week period within the fourth quarter of fiscal 2024.

Natural Adjusted EBITDA increased 6.7% for fiscal 2024 as compared to fiscal 2023.

The increase was driven by an increase in gross profit, partially offset by an increase in operating expenses.

• Natural Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, increased $60 million.

The 53rd week in fiscal 2024 contributed an estimated $38 million to Natural Gross profit in fiscal 2024.

Natural gross profit rate decreased approximately 32 basis points primarily driven by lower levels of procurement gains resulting from decelerating inflation, partially offset by the benefit of lower shrink expense.

The 53rd week in fiscal 2024 contributed an estimated $32 million to Natural Operating expense in fiscal 2024.

Natural operating expense rate decreased approximately 35 basis points primarily due to lower transportation costs and other operational supply chain efficiencies, partially offset by higher incentive compensation expense and higher occupancy-related costs.

Conventional Adjusted EBITDA decreased 27.2% for fiscal 2024 as compared to fiscal 2023.

The decrease was driven by a decrease in gross profit, combined with an increase in operating expenses.

• Conventional Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, decreased $62 million.

The 53rd week in fiscal 2024 contributed an estimated $29 million to Conventional Gross profit in fiscal 2024.

Conventional gross profit rate decreased approximately 35 basis points primarily driven by lower levels of procurement gains resulting from decelerating inflation, partially offset by the benefit of lower shrink expense and recoveries from vendors related to legal settlements.

The 53rd week in fiscal 2024 contributed an estimated $25 million to Conventional Operating expense in fiscal 2024.

Conventional operating expense rate increased approximately 18 basis points primarily due to higher incentive compensation expense and the deleveraging impact of lower sales on higher costs, partially offset by lower transportation costs.

Retail Adjusted EBITDA decreased 88.9% for fiscal 2024 as compared to fiscal 2023.

Retail Gross profit excluding the LIFO charge for fiscal 2024 decreased $55 million, when excluding an estimated $11 million benefit from the 53rd week in fiscal 2024.

• Retail Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, decreased $44 million.

The 53rd week in fiscal 2024 contributed an estimated $11 million to Retail Gross profit in fiscal 2024.

Retail gross profit rate decreased approximately 132 basis points from margin rate investments intended to drive traffic and lower sales volume.

Retail Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 16—Business Segments in Part II, Item 8 of this Annual Report, increased $10 million when excluding an estimated $11 million impact from the 53rd week in fiscal 2024.

Retail operating expense rate increased 129 basis points primarily driven by decreased leverage on higher fixed and variable costs against lower sales.

Retail depreciation and amortization expense decreased $2 million for fiscal 2024 compared to fiscal 2023, when excluding an estimated $1 million in additional expense from the 53rd week in fiscal 2024.

The 53rd week in fiscal 2024 contributed an estimated $11 million to Retail Operating expense in fiscal 2024.

Retail operating expense rate increased approximately 125 basis points primarily driven by the deleveraging impact of lower sales and higher fixed and variable costs.

LIQUIDITY AND CAPITAL RESOURCES

• Total liquidity as of August 2, 2025 was $1,497 million and consisted of the following:

◦ $1,235 million of unused credit under our asset-based revolving credit facility (the “ABL Credit Facility”) as of August 3, 2024, which decreased $245 million from $1,480 million as of July 29, 2023, primarily due to increased borrowings under the ABL Credit Facility utilized to fund voluntary prepayments on the Term Loan Facility (as described below) and payments used in investing activities, partially offset by net cash flow from operating activities and higher levels of availability under the ABL Credit Facility resulting from the First ABL Amendment (defined below);

◦ $40 million of cash and cash equivalents as of August 3, 2024, which increased $3 million from $37 million as of July 29, 2023.

• Total debt increased $122 million to $2,085 million as of August 3, 2024 from $1,963 million as of July 29, 2023, primarily related to additional net borrowings under the ABL Credit Facility to fund payments used in investing activities and for debt issuance costs, partially offset by net cash flow from operating activities.

• Working capital decreased $21 million to $1,037 million as of August 3, 2024 from $1,058 million as of July 29, 2023, primarily due to a decrease in inventory levels and an increase in accrued compensation and benefits, which were partially offset by a decrease in accounts payable combined with an increase in accounts receivable.

• In the fourth quarter of fiscal 2024, we entered into an amendment to the ABL Loan Agreement (the “First ABL Amendment”) to execute on a First In, Last Out (“FILO”) tranche of incremental loans (the “ABL FILO Loan”) and used the $130 million in proceeds from the ABL FILO Loan and borrowings under the ABL Credit Facility to fund a $145 million voluntary prepayment on the Term Loan Facility.

• Concurrent with the voluntary prepayment on the Term Loan Facility, we entered into an amendment to the Term Loan Agreement (the “Fourth Term Loan Amendment”) to reduce the principal amount of the Term Loan Facility to $500 million and extend the maturity to May 1, 2031.

◦ $1,453 million of unused credit under our asset-based revolving credit facility (the “ABL Credit Facility”), which increased $218 million from $1,235 million as of August 3, 2024, primarily due to a reduction of net borrowings under the ABL Credit Facility and an increase in the borrowing base;

◦ $44 million of cash and cash equivalents, which increased $4 million from $40 million as of August 3, 2024.

• Total debt decreased $223 million to $1,862 million as of August 2, 2025 from $2,085 million as of August 3, 2024, primarily related to debt repayments and a reduction in net borrowings under the ABL Credit Facility due to net cash provided by operating activities, partially offset by payments for capital expenditures and investments.

• Working capital decreased $216 million to $821 million as of August 2, 2025 from $1,037 million as of August 3, 2024, primarily due to an increase in accounts payable to support higher purchasing levels combined with a decrease in inventory levels, partially offset by increases in accounts receivable from higher sales.

• In the fourth quarter of fiscal 2025, we made a voluntary prepayment of $100 million on the Term Loan Facility funded with incremental borrowings under the ABL Credit Facility.

• In connection with the contract termination described further in Note 4—Restructuring, Acquisition and Integration Related Expenses, we paid $18 million in the fourth quarter of fiscal 2025 and an additional $18 million was paid subsequent to the end of fiscal 2025.

Remaining installments totaling $17 million are expected to be paid in the first quarter of fiscal 2026.

• In fiscal 2026, scheduled debt maturities are expected to be $5 million.

Based on the Company’s Excess Cash Flow (as defined in the Term Loan Agreement) in fiscal 2024, no prepayment from Excess Cash Flow in fiscal 2024 is required to be made in fiscal 2025.

Based on our Consolidated First Lien Net Leverage Ratio (as defined in the Term Loan Agreement) at the end of fiscal 2025, no prepayment from Excess Cash Flow in fiscal 2025 is required to be made on the Term Loan Facility in fiscal 2026.

Sources and Uses of Cash

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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.

Primary uses of cash include debt service, capital expenditures, working capital maintenance depending on seasonality and other fluctuations, investments in cloud technologies and income tax payments.

We typically finance working capital needs with cash provided from operating activities and short-term borrowings.

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Long-Term Debt

During fiscal 2024, we borrowed a net $301 million under the ABL Credit Facility, including $130 million from the creation of the FILO tranche of incremental loans described above, and made voluntary prepayments on the Term Loan Facility totaling $171 million.

During fiscal 2025, we reduced borrowings under the ABL Credit Facility by a net $114 million, and made voluntary and mandatory prepayments on the Term Loan Facility totaling $116 million.

Refer to Note 9—Long-Term Debt in Part II, Item 8 of this Annual Report for a detailed discussion of the provisions of our credit facilities and certain long-term debt agreements and additional information.

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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.

In the fourth quarter of fiscal 2024, we entered into an amendment to the ABL Loan Agreement to execute on a FILO tranche of incremental loans under the ABL Loan Agreement.

The First ABL Amendment provides for the creation of a FILO tranche of $130 million with an applicable margin equal to Secured Overnight Financing Rate (“SOFR”) plus 2.50% per annum (or a base rate plus 1.50% per annum).

The ABL FILO Loan is subject to a borrowing base consisting of specified percentages of the value of eligible accounts receivable, credit card receivables, inventory, pharmacy receivables and pharmacy prescription files.

Also in the fourth quarter of fiscal 2024, we entered into the Fourth Term Loan Amendment, which provides for the reduction of the principal amount of the Term Loan Facility to $500 million, the extension of the maturity to May 1, 2031, subject to certain springing maturity conditions, and a change in the applicable margin over a base rate from 2.25% to 3.75% per annum, or over a SOFR rate from 3.25% to 4.75% per annum.

In conjunction with the First ABL Amendment and the Fourth Term Loan Amendment, we made a voluntary prepayment of $145 million on the Term Loan Facility funded with the $130 million of ABL FILO Loan proceeds and incremental borrowings under the ABL Credit Facility.

Refer to Note 9—Long-Term Debt in Part II, Item 8 of this Annual Report for additional information.

Refer to Note 9—Long-Term Debt in Part II, Item 8 of this Annual Report for further detail of our scheduled debt maturities by fiscal year and by debt instrument, which excludes debt prepayments that may be required from Excess Cash Flow (as defined in the Term Loan Agreement) generated or sales of mortgaged properties in fiscal 2026 or beyond.

Based on our Excess Cash Flow (as defined in the Term Loan Agreement) in fiscal 2024, no prepayment from Excess Cash Flow in fiscal 2024 is required to be made in fiscal 2025.

Derivatives and Hedging Activity

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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 August 3, 2024, we had an aggregate of $750 million of floating rate notional debt subject to active interest rate swap contracts, which effectively fix the SOFR component of our floating interest payments through pay fixed and receive floating interest rate swap agreements.

As of August 2, 2025, we had an aggregate of $750 million of floating rate notional debt subject to active interest rate swap contracts, which effectively fix the Secured Overnight Financing Rate (“SOFR”) component of our floating interest payments through pay fixed and receive floating interest rate swap agreements.

These fixed rates range from 2.475% to 4.130%, with maturities between October 2025 and June 2028.

The fair values of these interest rate derivatives represent a total net asset of $0 million as of August 3, 2024, and are subject to volatility based on changes in market interest rates.

The fair values of these interest rate derivatives represent a total net liability of $2 million as of August 2, 2025, and are subject to volatility based on changes in market interest rates.

Refer to Note 8—Derivatives in Part II, Item 8 and Interest Rate Risk in Part II, Item 7A of this Annual Report for additional information.

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Payments for Capital Expenditures and Cloud Technology Implementation Expenditures

Our capital expenditures for fiscal 2024 were $345 million compared to $323 million for fiscal 2023, an increase of $22 million.

Our capital expenditures for fiscal 2025 were $231 million compared to $345 million for fiscal 2024, a decrease of $114 million.

Our capital spending for fiscal 2025 and 2024 principally included supply chain and information technology expenditures, including investments in growth initiatives and maintenance expenditures.

Fiscal 2025 included $193 million of distribution center improvements, technology and other expenditures, including investments in automation, $20 million of Retail expenditures and $18 million of investments in new distribution centers.

Fiscal 2024 included $280 million of distribution center improvements, technology and other expenditures, $41 million of investments in new distribution centers, primarily the new Manchester, Pennsylvania distribution center, and $24 million of Retail expenditures.

Fiscal 2023 included $290 million of distribution center improvements, technology and other expenditures, and $33 million of Retail expenditures.

Cloud technology implementation expenditures, which are included in operating activities in the Consolidated Statements of Cash Flows, were $7 million for fiscal 2025 compared to $25 million for fiscal 2024.

Fiscal 2025 capital and cloud implementation spending is expected to be approximately $300 million and includes projects that automate, optimize and expand our distribution network, as well as our technology platform investments.

Fiscal 2026 capital and cloud implementation spending is expected to be approximately $250 million and includes technology platform investments and projects that automate and optimize our distribution network.

The components of capital and cloud implementation expenditures for fiscal 2026 will be primarily dependent on the nature of certain contracts to be executed.

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Net cash provided by operating activities

$ 470 $ 253 $ 217

Net cash used in investing activities

Net cash provided by (used in) financing activities 92 (292) 384

(218) (342) 124

Net cash (used in) provided by financing activities

(248) 92 (340)

Effect of exchange rate on cash — — —

Net increase (decrease) in cash and cash equivalents 3 (7) 10

Net increase in cash and cash equivalents

Cash and cash equivalents, at beginning of period 40 37 3

Cash and cash equivalents at end of period $ 44 $ 40 $ 4

Fiscal 2024 compared to Fiscal 2023

The decrease in net cash provided by operating activities was primarily due to lower levels of cash generated by net working capital, including lower proceeds received from the monetization of certain receivables compared to fiscal 2023 and higher receivables levels from sales growth in fiscal 2024.

These decreases in cash provided by operating activities were partially offset by higher levels of accrued incentive compensation net of related payments and lower inventory levels net of related payables in fiscal 2024.

In addition, lower cash was generated from net income in fiscal 2024.

The increase in net cash used in investing activities was primarily due to increased payments for capital expenditures in fiscal 2024.

The increase in net cash provided by financing activities was primarily due to an increase in net borrowings under the ABL Credit Facility resulting from decreases in net cash provided by operating activities, increases in net cash used in investing activities and the creation of the FILO tranche of incremental loans discussed above, and a decrease in cash used to repurchase common stock.

The increase in net cash provided by operating activities was primarily due to higher levels of cash generated by net working capital, primarily resulting from an increase in Accounts payable in fiscal 2025 related to higher purchasing levels to support higher sales levels.

The decrease in net cash used in investing activities was primarily due to lower payments for capital expenditures.

The increase in net cash used in financing activities was primarily due to an increase in net repayments of borrowings under the ABL Credit Facility resulting from the increase in net cash provided by operating activities and the decrease in net cash used in investing activities, as described above, partially offset by lower levels of repayments of long-term debt and finance leases.

Other Obligations and Commitments

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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 2025.

We fund our defined benefit pension 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.

An insignificant amount of contributions is expected to be made to other defined benefit pension plans and postretirement benefit plans in fiscal 2026.

We fund our tax-qualified defined benefit pension 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.

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 the ability to achieve exemption from participant notices of underfunding.

Off-Balance Sheet Multiemployer Pension Arrangements

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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 agreements.

Plan trustees are typically 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 the unions that are parties to the relevant collective bargaining 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.

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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.

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In fiscal 2026, we expect to contribute approximately $50 million to multiemployer plans, subject to the outcome of collective bargaining and capital market conditions.

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.

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.

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In September 2022, our Board of Directors authorized a 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 1,888,000 shares of our common stock for a total cost of $62 million in fiscal 2023.

We did not repurchase any shares of our common stock in fiscal 2024.

As of August 2, 2025, we had $138 million remaining authorized under the 2022 Repurchase Program.

We did not repurchase any shares of our common stock in fiscal 2025.

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.

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Management believes the following critical accounting estimates reflect our more subjective or complex judgments and estimates used in the preparation of our Consolidated Financial Statements.

Inventories are valued at the lower of cost or market.

Inventories are predominantly valued at the lower of cost or market.

Substantially all of our inventories consist of finished goods.

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The majority of our inventory is valued under the LIFO method, which allows for matching of costs and revenues, as the current acquisition cost is used to value cost of goods sold as inventory is sold in an inflationary environment.

During fiscal 2024, inventory quantities in certain LIFO layers were reduced.

These reductions resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of fiscal 2024 purchases, the effect of which decreased Cost of sales by approximately $15 million in fiscal 2024.

If the first-in, first-out (“FIFO”) method had been used, Inventories, net, would have been higher by approximately $351 million and $344 million at August 3, 2024 and July 29, 2023, respectively.

During fiscal 2025 and fiscal 2024, inventory quantities in certain LIFO layers were reduced.

These reductions resulted in a liquidation of LIFO inventory quantities carried at lower costs prevailing in prior years as compared with the cost of fiscal 2025 and fiscal 2024 purchases, the effect of which decreased Cost of sales by approximately $28 million in fiscal 2025 and $15 million in fiscal 2024.

If the first-in, first-out (“FIFO”) method had been used, Inventories, net, would have been higher by approximately $349 million and $351 million at August 2, 2025 and August 3, 2024, respectively.

As of August 2, 2025, approximately $1.8 billion or 81% of inventory was valued under the LIFO method, before the application of any LIFO reserve, and primarily included grocery, frozen food and general merchandise products, with the remaining inventory valued under the first-in, first-out method and primarily included meat, dairy and deli products.

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We contribute to various multiemployer pension plans based on obligations arising from collective bargaining agreements.

These multiemployer pension plans provide retirement benefits to participants based on their service to contributing employers.

These multiemployer pension 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 are typically responsible for determining the level of benefits to be provided to participants as well as such matters as the investment of the assets and the administration of the plans.

Plan trustees are typically responsible for determining the level of benefits to be provided to participants as well as the investment of the assets and plan administration.

We continue to evaluate and address our potential exposure to underfunded multiemployer pension plans as it relates to our associates who are or were beneficiaries of these plans.

In the future, we may consider opportunities to limit the Company’s exposure to underfunded multiemployer pension obligations by moving our active associates in such plans to defined contribution plans, and withdrawing from the pension plan or continuing to participate in the plans for prior obligations.

In the future, we may consider opportunities to limit our exposure to underfunded multiemployer pension obligations by moving our active associates in such plans to defined contribution plans, and withdrawing from the pension plan or continuing to participate in the plans for prior obligations.

As we continue to work to find solutions to underfunded multiemployer pension plans, it is possible we could incur withdrawal liabilities for certain additional multiemployer pension plan obligations in the future as we actively negotiate new collective bargaining agreements with a number of our unions in due course.

The American Rescue Plan Act (“ARPA”) established the Special Financial Assistance (“SFA”) Program for financially troubled multiemployer pension plans.

Under ARPA, eligible multiemployer pension plans can apply to receive a cash payment intended to keep the plan solvent and able to pay pension benefits through the plan year ending 2051.

As of the end of fiscal 2024, one plan to which the Company contributes has received SFA, and two other plans to which the Company contributes are currently on the waiting list to apply for SFA funding.

Under ARPA, eligible multiemployer pension plans can apply to receive a cash payment intended to keep the plans solvent and able to pay pension benefits through the plan year ending 2051.

As of the end of fiscal 2025, two plans in which we participate have received SFA, and one other plan in which we participate received SFA funding subsequent to the end of fiscal 2025.

Although these liabilities are not a direct obligation or liability of ours, addressing these uncertainties requires judgment in the timing of expense recognition when we determine our commitment is probable and estimable.

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If actual claims incurred are greater than those anticipated, our reserves may be insufficient and additional costs could be recorded in our Consolidated Financial Statements.

Accruals for workers’ compensation, general and automobile liabilities totaled $89 million and $97 million as of August 3, 2024 and July 29, 2023, respectively.

Accruals for workers’ compensation, general and automobile liabilities totaled $100 million and $89 million as of August 2, 2025 and August 3, 2024, respectively.

Recoverability of long-lived assets

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These estimates project cash flows several years into the future and include assumptions on variables such as changes in supply contracts, macroeconomic impacts and market competition.

As part of our quarterly procedures and annual impairment assessment, we recognized a $21 million non-cash asset impairment charge related to one of our corporate-owned office locations in the first quarter of fiscal 2024, a $7 million non-cash asset impairment charge related to the decision to close certain retail store locations in the third quarter of 2024 and a $15 million non-cash impairment charge related to the decision to close certain leased and owned distribution center locations in the fourth quarter of fiscal 2024.

The Company accounts for income taxes under the asset and liability method.

In fiscal 2025, we recognized a $24 million non-cash asset impairment charge related to a distribution center in our East region.

We account for income taxes under the asset and liability method.

Under the asset and liability method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases.

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The effect on deferred tax assets and liabilities of a change in tax rates is recognized within the provision for income tax in the period that includes the enactment date.

The calculation of the Company’s tax liabilities includes addressing uncertainties in the application of complex tax regulations and is based on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

The calculation of our tax liabilities includes addressing uncertainties in the application of complex tax regulations and is based on the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return.

Addressing these uncertainties requires judgment and estimates;

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Favorable tax settlements may be recognized as a reduction to our effective tax rate in the period of resolution.

The Company regularly reviews its deferred tax assets for recoverability to evaluate whether it is more likely than not that they will be realized.

In making this evaluation, the Company considers the statutory recovery periods for the assets, along with available sources of future taxable income, including reversals of existing and future taxable temporary differences, tax planning strategies, history of taxable income and projections of future income.

The Company gives more significance to objectively verifiable evidence, such as the existence of deferred tax liabilities that are forecast to generate taxable income within the relevant carryover periods and a history of earnings.

A valuation allowance is provided when the Company concludes, based on all available evidence, that it is more likely than not that the deferred tax assets will not be realized during the applicable recovery period.

We regularly review our deferred tax assets for recoverability to evaluate whether it is more likely than not that they will be realized.

In making this evaluation, we consider the statutory recovery periods for the assets, along with available sources of future taxable income, including reversals of existing and future taxable temporary differences, tax planning strategies, history of taxable income and projections of future income.

We give more significance to objectively verifiable evidence, such as the existence of deferred tax liabilities that are forecast to generate taxable income within the relevant carryover periods and a history of earnings.

A valuation allowance is provided when we conclude, based on all available evidence, that it is more likely than not that the deferred tax assets will not be realized during the applicable recovery period.

The OBBBA was signed into law on July 4, 2025.

Accounting Standards Codification (“ASC”) 740, “Income Taxes”, requires the effects of changes in tax laws to be recognized in the period in which the legislation is enacted.

The OBBBA includes numerous provisions that affect corporate taxation, including the immediate expensing of domestic research and development costs and modifying the interest expense limitation.

Refer to Note 14—Income Taxes in Part II, Item 8 of this Annual Report for more information relating to effects of the new tax legislation on the Company.

Recently Issued Financial Accounting Standards

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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 7. Management’s Discussion and Analysis