What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-03-10 compared with 2025-12-02 · 167 added, 107 removed, 255 unchanged (52% of the section changed)

36 unchanged sentences

Business Overview

UNFI is a leading distributor of grocery and non-food products, and support services provider to retailers in the United States and Canada.

United Natural Foods, Inc.

and its subsidiaries (“UNFI”, “we”, “us”, “our”, the “Company”) 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, programs and services to customers throughout North America.

11 unchanged sentences

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;

We are executing against our value creation strategy, which seeks to build capabilities that add value to our customers and suppliers through our portfolio of products, programs, insights and services, while improving our effectiveness and efficiency.

We are focused on controllable variables in several key areas:

network optimization;

managing annual capital spending;

optimizing our cost structure;

and reducing our net working capital position.

and optimizing our cost structure and net working capital position.

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.

4 unchanged sentences

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.

In addition, changes in pricing levels continue 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.

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Wholesale Distribution Network Optimization

We continue to evaluate our distribution center network to better and more efficiently service customers and suppliers and further optimize performance.

In connection with the termination of our supply agreement with a customer in the East region in fiscal 2025, we ceased operations at our Allentown, Pennsylvania distribution center in the first quarter of fiscal 2026 with the remaining volume consolidated into other facilities in the Northeast.

1 unchanged sentence

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

We continue to evaluate our distribution center network to better and more efficiently service customers and suppliers and further optimize performance.

We could incur incremental expenses related to any future network realignment, expansion or improvements, including network optimization and automation initiatives.

1 unchanged sentence

Retail Operations

We operated 70 grocery stores, including 53 Cub Foods stores and 17 Shoppers stores, as of November 1, 2025.

We operated 66 grocery stores, including 53 Cub Foods stores and 13 Shoppers stores, as of January 31, 2026.

In addition, we supplied another 24 Cub Foods stores operated by our wholesale customers through franchise and minority equity ownership arrangements.

We operated 77 pharmacies primarily within the stores we operate and the stores of our franchisees.

In addition, we operated 23 “Cub Wine and Spirit” and “Cub Liquor” stores.

Subsequent to the end of the first quarter of fiscal 2026, we closed four Shoppers stores which were previously announced for closure during the first quarter of fiscal 2026.

In addition, we operated 23 “Cub Wine and Spirits” 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 the first quarter of fiscal 2026.

In the aggregate across our businesses, including the mix of products, management estimates our businesses experienced product cost inflation of approximately three percent in the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025.

We experienced a mix of inflation and deflation across product categories during the second quarter of fiscal 2026.

In the aggregate across our businesses, including the mix of products, management estimates our businesses experienced product cost inflation of approximately three percent in the second quarter of fiscal 2026 as compared to the second quarter of fiscal 2025.

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

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

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

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

Assessment of Our Business Results

The following table sets forth a summary of our results of operations and Adjusted EBITDA for the periods indicated.

13-Week Period Ended

(in millions) November 1, 2025 November 2, 2024 Change

13-Week Period Ended 26-Week Period Ended

(in millions) January 31, 2026 February 1, 2025 Change January 31, 2026 February 1, 2025 Change

Net sales $ 7,947 $ 8,158 $ (211) $ 15,787 $ 16,029 $ (242)

7 unchanged sentences

Interest expense, net 32 38 (6) 66 74 (8)

Other income, net — (2) 2

Loss before income taxes (9) (24) 15

Benefit for income taxes (5) (4) (1)

Net loss including noncontrolling interests (4) (20) 16

Other expense (income), net 8 (1) 9 8 (3) 11

Income (loss) before income taxes 23 (5) 28 14 (29) 43

Provision (benefit) for income taxes 3 (3) 6 (2) (7) 5

Net income (loss) including noncontrolling interests 20 (2) 22 16 (22) 38

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

Net loss attributable to United Natural Foods, Inc.

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

$ 20 $ (3) $ 23 $ 16 $ (24) $ 40

1 unchanged sentence

$ 179 $ 145 $ 34 $ 346 $ 279 $ 67

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

13-Week Period Ended

(in millions) November 1, 2025 November 2, 2024

Net loss including noncontrolling interests $ (4) $ (20)

Adjustments to net loss including noncontrolling interests:

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

13-Week Period Ended 26-Week Period Ended

(in millions) January 31, 2026 February 1, 2025 January 31, 2026 February 1, 2025

Net income (loss) including noncontrolling interests $ 20 $ (2) $ 16 $ (22)

Adjustments to net income (loss) including noncontrolling interests:

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

Net periodic benefit income, excluding service cost

(6) (5) (12) (10)

Interest expense, net 32 38 66 74

Other income, net — (2)

Benefit for income taxes (5) (4)

Other expense (income), net 8 (1) 8 (3)

Provision (benefit) for income taxes 3 (3) (2) (7)

Depreciation and amortization 74 81 151 161

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Adjusted EBITDA $ 179 $ 145 $ 346 $ 279

(1) Fiscal 2026 primarily reflects adjustments to previously recorded multiemployer pension plan withdrawal liabilities, distribution center and store closure charges and costs and costs associated with certain employee severance and other employee separation costs.

Fiscal 2025 primarily reflects costs associated with certain employee severance and other employee separation costs.

(2) Fiscal 2026 primarily includes a $10 million non-cash asset impairment charge related to the decision to close certain retail store locations.

(1) Fiscal 2026 primarily reflects distribution center and store closure charges, adjustments to previously recorded multiemployer pension plan withdrawal liabilities and costs associated with certain employee severance and other employee separation costs.

Fiscal 2025 primarily reflects costs associated with certain employee severance and other employee separation costs and distribution center and store closure charges.

See Notes to Condensed Consolidated Financial Statements for additional information.

(2) Fiscal 2026 primarily includes $5 million in non-cash impairment charges in the second quarter of fiscal 2026 related to the decision to discontinue operations at certain distribution centers, warehouses or offsite storage facilities, a $10 million non-cash asset impairment charge in the first quarter of fiscal 2026 related to the decision to close certain retail store locations and losses on the sales of receivables under the accounts receivable monetization program.

Fiscal 2025 primarily includes losses on the sales of receivables under the accounts receivable monetization program.

See Notes to Condensed Consolidated Financial Statements for additional information.

(3) Reflects costs associated with business transformation initiatives, primarily including third-party consulting costs and licensing costs, which are included within Operating expenses in the Condensed Consolidated Statements of Operations.

(4) Fiscal 2026 includes costs and charges related to the Cybersecurity Incident, of which $13 million are included within Gross profit and $1 million are included within Operating expenses in the Condensed Consolidated Statements of Operations.

These were partially offset by $10 million of insurance recoveries which are included within Operating expenses in the Condensed Consolidated Statements of Operations.

(4) Fiscal 2026 includes costs and charges and insurance recoveries related to the Cybersecurity Incident.

See Notes to Condensed Consolidated Financial Statements for additional information.

(5) Fiscal 2026 reflects accrued costs related to an agreement to settle certain legal proceedings, which are included within Operating expenses in the Condensed Consolidated Statements of Operations.

Fiscal 2025 reflects certain estimated accrued legal-related costs, which are included within Operating expenses in the Condensed Consolidated Statements of Operations.

RESULTS OF OPERATIONS

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13-Week Period Ended

Increase (Decrease) 26-Week Period Ended

Increase (Decrease)

(in millions, except percentages) November 1,

2025 November 2,

(in millions, except percentages) January 31,

2026 February 1,

2025 $ % January 31,

2026 February 1,

Natural $ 4,290 $ 4,021 $ 269 6.7 % $ 8,530 $ 7,859 $ 671 8.5 %

1 unchanged sentence

Retail 560 610 (50) (8.2) % 1,114 1,196 (82) (6.9) %

Eliminations (279) (317) 38 (12.0) %

Eliminations (295) (334) 39 N/M (574) (651) 77 N/M

Total net sales $ 7,947 $ 8,158 $ (211) (2.6) % $ 15,787 $ 16,029 $ (242) (1.5) %

Our Net sales for the first quarter of fiscal 2026 decreased approximately 0.4% from the first quarter of fiscal 2025.

The decrease in Net sales was primarily driven by a decrease in unit volumes, partially offset by inflation.

Natural Net sales for the first quarter of fiscal 2026 increased approximately 10.5% from the first quarter of fiscal 2025.

N/M - not meaningful

Second Quarter

Our Net sales for the second quarter of fiscal 2026 decreased approximately 2.6% from the second quarter of fiscal 2025.

The decrease in Net sales was primarily driven by a decrease in Conventional and Retail Net Sales, partially offset by an increase in Natural Net Sales.

Natural Net sales for the second quarter of fiscal 2026 increased approximately 6.7% from the second quarter of fiscal 2025.

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

Conventional Net sales for the first quarter of fiscal 2026 decreased approximately 11.7% from the first quarter of fiscal 2025.

The decrease was driven by a decline in unit volumes primarily due to the transition out of our Allentown, Pennsylvania distribution center, partially offset by increases from inflation.

Retail Net sales for the first quarter of fiscal 2026 decreased approximately 5.5% from the first quarter of fiscal 2025.

The decrease was primarily driven by a 3.1% decrease in identical store sales from lower volume, and store closures.

Lower eliminations of Net sales for the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025 were primarily due to a decrease in Conventional to Retail sales, which are eliminated upon consolidation.

Conventional Net sales for the second quarter of fiscal 2026 decreased approximately 12.1% from the second quarter of fiscal 2025.

The decrease was driven by a decline in unit volumes including the impact from network optimization largely driven by the transition out of our Allentown, Pennsylvania distribution center, partially offset by increases from inflation.

Retail Net sales for the second quarter of fiscal 2026 decreased approximately 8.2% from the second quarter of fiscal 2025.

The decrease was primarily driven by store closures and a 2.1% decrease in identical store sales from lower volume.

Lower eliminations of Net sales for the second quarter of fiscal 2026 as compared to the second quarter of fiscal 2025 were primarily due to a decrease in Conventional to Retail sales, which are eliminated upon consolidation.

Our Net sales for fiscal 2026 year-to-date decreased approximately 1.5% from fiscal 2025 year-to-date.

The decrease in Net sales was primarily driven by a decrease in Conventional and Retail Net Sales, partially offset by an increase in Natural Net Sales.

Natural Net sales for fiscal 2026 year-to-date increased approximately 8.5% from fiscal 2025 year-to-date.

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

Conventional Net sales for fiscal 2026 year-to-date decreased approximately 11.9% from fiscal 2025 year-to-date.

Retail Net sales for fiscal 2026 year-to-date decreased approximately 6.9% from fiscal 2025 year-to-date.

The decrease was primarily driven by store closures and a 2.5% decrease in identical store sales from lower volume.

Lower eliminations of Net sales for fiscal 2026 year-to-date as compared to fiscal 2025 year-to-date 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 $13 million, or 1.3%, to $1,051 million for the first quarter of fiscal 2026, from $1,038 million for the first quarter of fiscal 2025.

Our Gross profit as a percentage of Net sales increased to 13.4% for the first quarter of fiscal 2026 compared to 13.2% for the first quarter of fiscal 2025.

The increase in gross profit rate of 22 basis points was primarily driven by the positive impact of network optimization and customer mix, the favorable impact of supplier programs and higher levels of procurement gains, which were partially offset by lower product margin rates and $13 million of charges associated with the previously disclosed Cybersecurity Incident.

Our Gross profit decreased $26 million, or 2.4%, to $1,046 million for the second quarter of fiscal 2026, from $1,072 million for the second quarter of fiscal 2025.

Our Gross profit as a percentage of Net sales increased to 13.2% for the second quarter of fiscal 2026 compared to 13.1% for the second quarter of fiscal 2025.

The gross profit rate was primarily impacted by the benefits of network optimization and customer mix as well as higher levels of procurement gains, which were partially offset by a lower margin rate in the Retail segment.

Our Gross profit decreased $13 million, or 0.6%, to $2,097 million for fiscal 2026 year-to-date, from $2,110 million for fiscal 2025 year-to-date.

Our Gross profit as a percentage of Net sales increased to 13.3% for fiscal 2026 year-to-date compared to 13.2% for fiscal 2025 year-to-date.

The increase in gross profit rate was primarily driven by the positive impact of network optimization and customer mix as well as higher levels of procurement gains, which were partially offset by a lower margin rate in the Retail segment and $19 million of charges associated with the previously disclosed Cybersecurity Incident.

Operating Expenses

Operating expenses decreased $19 million, or 1.9%, to $996 million, or 12.7% of Net sales, for the first quarter of fiscal 2026 compared to $1,015 million, or 12.9% of Net sales, for the first quarter of fiscal 2025.

The decrease in Operating expenses as a percentage of Net sales was primarily driven by the benefits from cost saving initiatives and a $10 million cybersecurity insurance recovery.

Operating expenses decreased $59 million, or 5.7%, to $972 million, or 12.2% of Net sales, for the second quarter of fiscal 2026 compared to $1,031 million, or 12.6% of Net sales, for the second quarter of fiscal 2025.

The decrease in Operating expenses as a percentage of Net sales was primarily driven by the benefits from cost saving initiatives, including network optimization and higher levels of distribution center productivity, and insurance proceeds.

Operating expenses decreased $78 million, or 3.8%, to $1,968 million, or 12.5% of Net sales, for fiscal 2026 year-to-date compared to $2,046 million, or 12.8% of Net sales, for fiscal 2025 year-to-date.

The decrease in Operating expenses as a percentage of Net sales was primarily driven by the benefits from cost saving initiatives and $20 million in cybersecurity insurance recoveries.

Restructuring, Acquisition and Integration Related Expenses

Restructuring, acquisition and integration related expenses increased $10 million to $22 million for the first quarter of fiscal 2026, compared to $12 million for the first quarter of fiscal 2025.

The increase was primarily driven by an adjustment to previously recorded multiemployer pension plan withdrawal liabilities in the first quarter of fiscal 2026.

Restructuring, acquisition and integration related expenses decreased $1 million to $8 million for the second quarter of fiscal 2026, compared to $9 million for the second quarter of fiscal 2025.

The decrease was primarily driven by a decrease in certain employee severance and other employee separation costs and costs associated with outsourcing certain corporate functions under restructuring initiatives, partially offset by an increase in closed property charges and costs.

Restructuring, acquisition and integration related expenses increased $9 million to $30 million for fiscal 2026 year-to-date, compared to $21 million for fiscal 2025 year-to-date.

The increase was primarily driven by an adjustment to previously recorded multiemployer pension plan withdrawal liabilities in the first quarter of fiscal 2026 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 increased $8 million to $14 million for the first quarter of fiscal 2026, from $6 million for the first quarter of fiscal 2025.

The first quarter of fiscal 2026 primarily included a $10 million non-cash asset impairment charge related to the decision to close certain retail store locations, while there were no asset impairment charges in the first quarter of fiscal 2025.

The first quarters of fiscal 2026 and 2025 included losses on the sales of receivables under the accounts receivable monetization program.

Loss on sale of assets and other asset charges increased $4 million to $9 million for the second quarter of fiscal 2026, from $5 million for the second quarter of fiscal 2025.

The second quarter of fiscal 2026 primarily included $5 million of non-cash asset impairment charges related to decisions to discontinue operations at certain leased distribution centers, warehouses or offsite storage facilities as we continue to optimize our distribution center network, while there were no asset impairment charges in the second quarter of fiscal 2025.

The second quarters of fiscal 2026 and 2025 included losses on the sales of receivables under the accounts receivable monetization program.

Loss on sale of assets and other asset charges increased $12 million to $23 million for fiscal 2026 year-to-date, from $11 million for fiscal 2025 year-to-date.

The increase was primarily driven by higher asset impairment charges.

Fiscal 2026 year-to-date primarily included $15 million in non-cash asset impairment charges related to decisions to close certain retail store locations and discontinue operations at certain distribution centers, warehouses or offsite storage facilities, while there were no asset impairment charges in fiscal 2025 year-to-date.

Fiscal 2026 and 2025 year-to-date included losses on the sales of receivables under the accounts receivable monetization program.

Operating Income

Reflecting the factors described above, Operating income increased $14 million to $19 million for the first quarter of fiscal 2026, compared to Operating income of $5 million for the first quarter of fiscal 2025.

The increase in Operating income was primarily driven by a decrease in Operating expenses and an increase in Gross profit, partially offset by an increase in Restructuring, acquisition and integration related expenses and Loss on sale of asset and other asset charges and in the first quarter of fiscal 2026, each as described above.

Reflecting the factors described above, Operating income increased $30 million to $57 million for the second quarter of fiscal 2026, compared to Operating income of $27 million for the second quarter of fiscal 2025.

The increase in Operating income was primarily driven by a decrease in Operating expenses, partially offset by a decrease in Gross profit and an increase in Loss on sale of assets and other asset charges in the second quarter of fiscal 2026, each as described above.

Reflecting the factors described above, Operating income increased $44 million to $76 million for fiscal 2026 year-to-date, compared to Operating income of $32 million for fiscal 2025 year-to-date.

The increase in Operating income was primarily driven by a decrease in Operating expenses, partially offset by a decrease in Gross profit and an increase in Loss on sale of assets and other asset charges and Restructuring, acquisition and integration related expenses in fiscal 2026 year-to-date, each as described above.

Interest Expense, Net

13-Week Period Ended

(in millions) November 1, 2025 November 2, 2024

13-Week Period Ended 26-Week Period Ended

(in millions) January 31, 2026 February 1, 2025 January 31, 2026 February 1, 2025

Interest expense on long-term debt, net of capitalized interest $ 31 $ 36 $ 63 $ 71

Interest expense on finance lease obligations 1 1 1 1

Amortization of financing costs and discounts 1 1 3 3

1 unchanged sentence

Interest expense, net $ 32 $ 38 $ 66 $ 74

The decrease in interest expense, net, in the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 was primarily driven by lower outstanding long-term debt balances.

Benefit for Income Taxes

The effective tax rate for the first quarter of fiscal 2026 was a benefit rate of 55.6% on pre-tax loss compared to a benefit rate of 16.7% on pre-tax loss for the first quarter of fiscal 2025.

The change from the first quarter of fiscal 2025 is primarily driven by discrete tax benefits from favorable tax audit settlements and employee stock awards in the first quarter of fiscal 2026, as well as the tax credit benefit of a solar array that was placed in service during the first quarter of fiscal 2026.

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 $4 million, or $0.06 per diluted common share, for the first quarter of fiscal 2026, compared to Net loss attributable to United Natural Foods, Inc.

of $21 million, or $0.35 per diluted common share, for the first quarter of fiscal 2025.

The decrease in interest expense, net, in the second quarter of fiscal 2026 compared to the second quarter of fiscal 2025 was primarily driven by lower outstanding long-term debt balances.

The decrease in interest expense, net, in fiscal 2026 year-to-date compared to fiscal 2025 year-to-date was primarily driven by lower outstanding long-term debt balances.

Provision (Benefit) for Income Taxes

The effective tax rate for the second quarter of fiscal 2026 was an expense rate of 13.0% on pre-tax income compared to a benefit rate of 60.0% on pre-tax loss for the second quarter of fiscal 2025.

The change from the second quarter of fiscal 2025 is primarily driven by the increase in pre-tax income during the second quarter of fiscal 2026.

The effective tax rate for fiscal 2026 year-to-date was a benefit rate of 14.3% on pre-tax income compared to a benefit rate of 24.1% on pre-tax loss for fiscal 2025 year-to-date.

The change from fiscal 2025 year-to-date is primarily driven by the increase in pre-tax income, discrete tax benefits from favorable tax audit settlements and employee stock award vestings during fiscal 2026, as well as the tax credit benefit of a solar array placed in service during the first quarter of fiscal 2026.

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

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

was $20 million, or $0.31 per diluted common share, for the second quarter of fiscal 2026, compared to Net loss attributable to United Natural Foods, Inc.

of $3 million, or $0.05 per diluted common share, for the second quarter of fiscal 2025.

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

was $16 million, or $0.25 per diluted common share, for fiscal 2026 year-to-date, compared to Net loss attributable to United Natural Foods, Inc.

of $24 million, or $0.39 per diluted common share, for fiscal 2025 year-to-date.

Adjusted EBITDA

2 unchanged sentences

Refer to Note 14—Business Segments within Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

13-Week Period Ended

(in millions) November 1, 2025 November 2, 2024 Increase (Decrease)

13-Week Period Ended 26-Week Period Ended

(in millions) November 1, 2025 November 2, 2024 Increase (Decrease) November 1, 2025 November 2, 2024 Increase (Decrease)

Natural $ 130 $ 97 $ 33 $ 257 $ 199 $ 58

1 unchanged sentence

Retail (5) 7 (12) (14) 8 (22)

Corporate and Other (21) (14) (7)

Total Adjusted EBITDA $ 167 $ 134 $ 33

Natural Adjusted EBITDA increased $25 million, or 24.5%, for the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025.

Second Quarter

Natural Adjusted EBITDA increased $33 million, or 34.0%, for the second quarter of fiscal 2026 as compared to the second quarter of fiscal 2025.

The increase was driven by an increase in gross profit excluding the LIFO charge and other adjustments as outlined in Note 14—Business Segments combined with a decrease in operating expenses.

• Natural Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, increased $29 million.

Natural gross profit rate decreased approximately 15 basis points driven primarily by lower product margin rates and customer and product mix, which were partially offset by higher levels of procurement gains.

• Natural Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $4 million.

Natural operating expense rate decreased approximately 77 basis points primarily due to the leveraging impact of higher sales and the benefits from cost saving initiatives, partially offset by increases in costs associated with union and other employee benefits.

Conventional Adjusted EBITDA increased $15 million, or 25.4%, for the second quarter of fiscal 2026 as compared to the second quarter of fiscal 2025.

The increase was driven by a decrease in operating expenses, partially offset by a decrease in gross profit excluding the LIFO charge and other adjustments as outlined in Note 14—Business Segments.

• Conventional Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, decreased $24 million.

Conventional gross profit rate increased approximately 73 basis points driven primarily by the positive impact of network optimization and customer and product mix as well as higher levels of procurement gains.

• Conventional Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $39 million.

Conventional operating expense rate increased approximately 8 basis points primarily due to the deleveraging impact of lower sales on fixed costs, partially offset by benefits from cost saving initiatives, including network optimization.

Retail Adjusted EBITDA decreased $12 million for the second quarter of fiscal 2026 as compared to the second quarter of fiscal 2025.

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

• Retail Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, decreased $24 million.

Retail gross profit rate decreased approximately 200 basis points driven primarily by lower product margin rates and changes in category mix.

• Retail Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $12 million.

Retail operating expense rate was approximately flat to fiscal 2025 primarily due to the deleveraging impact of lower sales on fixed costs, offset by lower labor costs from operating efficiencies and store closures.

Natural Adjusted EBITDA increased $58 million, or 29.1%, for fiscal 2026 year-to-date as compared to fiscal 2025 year-to-date.

The increase was driven by an increase in gross profit excluding the LIFO charge and other adjustments as outlined in Note 14—Business Segments, partially offset by an increase in operating expenses.

• Natural Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, increased $77 million.

Natural gross profit rate decreased approximately 17 basis points driven primarily by lower product margin rates and customer and product mix, which were partially offset through supplier programs and higher levels of procurement gains.

Natural gross profit rate decreased approximately 16 basis points driven primarily by lower product margin rates and customer and product mix, which were partially offset through higher levels of procurement gains and supplier programs.

• Natural Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, increased $19 million.

Natural operating expense rate decreased approximately 50 basis points primarily due to the leveraging impact of higher sales and the benefits from cost saving initiatives, partially offset by increases in bad debt expense and costs associated with union and other employee benefits.

Conventional Adjusted EBITDA increased $25 million, or 55.6%, for the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025.

Natural operating expense rate decreased approximately 63 basis points primarily due to the leveraging impact of higher sales and the benefits from cost saving initiatives, partially offset by increases costs associated with union and other employee benefits.

Conventional Adjusted EBITDA increased $40 million, or 38.5%, for fiscal 2026 year-to-date as compared to fiscal 2025 year-to-date.

The increase was driven by a decrease in operating expenses, partially offset by a decrease in gross profit excluding the LIFO charge and other adjustments as outlined in Note 14—Business Segments.

• Conventional Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, decreased $34 million.

Conventional gross profit rate increased approximately 105 basis points driven primarily by customer mix, higher levels of procurement gains and recoveries related to settlements with customers and suppliers in the first quarter of fiscal 2026.

Conventional gross profit rate increased approximately 89 basis points driven primarily by the positive impact of network optimization and customer and product mix, higher levels of procurement gains and recoveries related to settlements with customers and suppliers in the first quarter of fiscal 2026.

• Conventional Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $74 million.

Conventional operating expense rate increased approximately 14 basis points primarily due to the deleveraging impact of lower sales on fixed costs, partially offset by benefits from cost saving initiatives.

Retail Adjusted EBITDA decreased $10 million for the first quarter of fiscal 2026 as compared to the first quarter of fiscal 2025.

Conventional operating expense rate increased approximately 11 basis points primarily due to the deleveraging impact of lower sales on fixed costs, partially offset by benefits from cost saving initiatives, including network optimization.

Retail Adjusted EBITDA decreased $22 million for fiscal 2026 year-to-date as compared to fiscal 2025 year-to-date.

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

• Retail Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, decreased $38 million.

Retail gross profit rate decreased approximately 107 basis points driven primarily by lower sales volume and changes in category mix.

Retail gross profit rate decreased approximately 154 basis points driven primarily by lower product margin rates, changes in category mix and lower sales volume.

• Retail Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $16 million.

Retail operating expense rate increased approximately 73 basis points primarily due to the deleveraging impact of lower sales, partially offset by lower labor costs from operating efficiencies.

Retail operating expense rate increased approximately 39 basis points primarily due to the deleveraging impact of lower sales on fixed costs, partially offset by lower labor costs from operating efficiencies.

LIQUIDITY AND CAPITAL RESOURCES

• Total liquidity as of November 1, 2025 was $1,327 million and consisted of the following:

◦ $1,289 million of unused credit under our asset-based revolving credit facility (the “ABL Credit Facility”), which decreased $164 million from $1,453 million as of August 2, 2025, primarily due to increased cash utilized to fund seasonal working capital increases and a reduction in the borrowing base;

◦ $38 million of cash and cash equivalents, which decreased $6 million from $44 million as of August 2, 2025.

• Total debt increased $58 million to $1,920 million as of November 1, 2025 from $1,862 million as of August 2, 2025, primarily related to an increase in net borrowings under the ABL Credit Facility due to net cash used in operating activities and payments for capital expenditures.

• Working capital increased $148 million to $969 million as of November 1, 2025 from $821 million as of August 2, 2025, primarily due to a seasonal increase in inventory levels combined with a decrease in accrued compensation and benefits, partially offset by a decrease in accounts receivable and an increase in accounts payable to support higher inventory levels.

• Total liquidity as of January 31, 2026 was $1,337 million and consisted of the following:

◦ $1,285 million of unused credit under our asset-based revolving credit facility (the “ABL Credit Facility”), which decreased $168 million from $1,453 million as of August 2, 2025, primarily due to a reduction in the borrowing base, partially offset by a reduction in net borrowings under the ABL Credit Facility;

◦ $52 million of cash and cash equivalents, which increased $8 million from $44 million as of August 2, 2025.

• Total debt decreased $146 million to $1,716 million as of January 31, 2026 from $1,862 million as of August 2, 2025, primarily related to 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 repurchases of common stock.

• Working capital decreased $12 million to $809 million as of January 31, 2026 from $821 million as of August 2, 2025, primarily due to a decrease in inventory levels combined with a decrease in accounts receivable, largely offset by a decrease in accounts payable related to lower inventory levels, a decrease in accrued compensation and benefits and an increase in prepaid expenses and other current assets.

• In connection with the contract termination described further in Note 4—Restructuring, Acquisition and Integration Related Expenses, we paid the remaining installments totaling $35 million in the first quarter of fiscal 2026.

• In the second quarter of fiscal 2026, we repurchased 742,622 shares of our common stock for a total cost of $25 million.

• In the second quarter of fiscal 2026, we made a voluntary prepayment of $9 million on our senior secured first lien term loan (the “Term Loan Facility”) funded with proceeds from the sale of the Bismarck, North Dakota distribution center.

• Subsequent to the end of the second quarter of fiscal 2026, on February 26, 2026, we redeemed $115 million of our $500 million of unsecured 6.750% senior notes due October 15, 2028 (the “Senior Notes”) funded with incremental borrowings under the ABL Credit Facility.

Sources and Uses of Cash

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We currently do not pay a dividend on our common stock.

In addition, we are limited in the aggregate amount of dividends that we may pay under the terms of our Term Loan Facility, ABL Credit Facility and our $500 million of unsecured 6.750% senior notes due October 15, 2028 (the “Senior Notes”).

In addition, we are limited in the aggregate amount of dividends that we may pay under the terms of our Term Loan Facility, ABL Credit Facility and Senior Notes.

Subject to certain limitations contained in our debt agreements and as market conditions warrant, we may from time to time refinance indebtedness that we have incurred, including through the incurrence or repayment of loans under existing or new credit facilities or the issuance or repayment of debt securities.

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Long-Term Debt

During the first quarter of fiscal 2026, we borrowed a net $58 million under the ABL Credit Facility.

During fiscal 2026 year-to-date, we reduced borrowings by a net $138 million under the ABL Credit Facility, and made voluntary and mandatory prepayments on the Term Loan Facility totaling $11 million.

Refer to Note 9—Long-Term Debt in Part I, Item 1 of this Quarterly Report on Form 10-Q for a detailed discussion of the provisions of our credit facilities and certain long-term debt agreements and additional information.

Our Term Loan Agreement and Senior Notes do not include any financial maintenance covenants.

Our ABL Loan Agreement subjects us to a fixed charge coverage ratio of at least 1.0 to 1.0 calculated at the end of each of our fiscal quarters on a rolling four quarter basis, if the adjusted aggregate availability is ever less than the greater of (i) $220 million, or $210 million if no ABL FILO Loans are then outstanding at such time and (ii) 10% of the aggregate borrowing base.

Our term loan agreement dated as of October 22, 2018 (as amended, the “Term Loan Agreement”) and Senior Notes do not include any financial maintenance covenants.

Our revolving credit agreement dated as of June 3, 2022 (as amended, the “ABL Loan Agreement”) subjects us to a fixed charge coverage ratio of at least 1.0 to 1.0 calculated at the end of each of our fiscal quarters on a rolling four quarter basis, if the adjusted aggregate availability is ever less than the greater of (i) $220 million, or $210 million if no ABL FILO Loans are then outstanding at such time and (ii) 10% of the aggregate borrowing base.

We have not been subject to the fixed charge coverage ratio covenant under the ABL Loan Agreement, including through the filing date of this Quarterly Report on Form 10-Q.

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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.

The potential amount of prepayment under the Term Loan Facility from Excess Cash Flow (as defined in the Term Loan Agreement) in fiscal 2026 that may be required in fiscal 2027 is not reasonably estimable as of November 1, 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 November 1, 2025, we had an aggregate of $550 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 3.597% to 4.130%, with maturities between October 2026 and June 2028.

The fair values of these interest rate derivatives represent a total net liability of $3 million as of November 1, 2025, and are subject to volatility based on changes in market interest rates.

As of January 31, 2026, we had an aggregate of $650 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 3.333% to 4.130%, with maturities between October 2026 and December 2028.

The fair values of these interest rate derivatives represent a total net liability of $3 million as of January 31, 2026, and are subject to volatility based on changes in market interest rates.

From time to time, we enter into fixed price fuel supply agreements and foreign currency hedges.

As of November 1, 2025, we had fixed price fuel contracts and foreign currency forward agreements outstanding.

As of January 31, 2026, we had fixed price fuel contracts and foreign currency forward agreements outstanding.

Gains and losses and the outstanding assets and liabilities from these arrangements are insignificant.

Payments for Capital Expenditures and Cloud Technology Implementation Expenditures

Our capital expenditures for the first quarter of fiscal 2026 were $16 million compared to $49 million for the first quarter of fiscal 2025, a decrease of $33 million.

Our capital spending for the first quarter of fiscal 2026 and 2025 principally included supply chain and information technology expenditures, including maintenance expenditures and investments in growth initiatives.

Cloud technology implementation expenditures, which are included in operating activities in the Condensed Consolidated Statements of Cash Flows, were $1 million for the first quarter of fiscal 2026 compared to $4 million for the first quarter of fiscal 2025.

Our capital expenditures for fiscal 2026 year-to-date were $56 million compared to $103 million for fiscal 2025 year-to-date, a decrease of $47 million primarily driven by reduced capital spending related to automation initiatives.

Our capital spending for fiscal 2026 and 2025 year-to-date principally included supply chain and information technology expenditures, including maintenance expenditures and investments in growth initiatives.

Cloud technology implementation expenditures, which are included in operating activities in the Condensed Consolidated Statements of Cash Flows, were $9 million for fiscal 2026 year-to-date compared to $5 million for fiscal 2025 year-to-date.

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

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26-Week Period Ended

(in millions) November 1, 2025 November 2, 2024 Change

Net cash used in operating activities

(in millions) January 31, 2026 February 1, 2025 Change

Net cash provided by operating activities

$ 245 $ 137 $ 108

Net cash used in investing activities

Net cash provided by financing activities

Net decrease in cash and cash equivalents

(46) (100) 54

Net cash used in financing activities

(192) (32) (160)

Effect of exchange rate on cash 1 (1) 2

Net increase in cash and cash equivalents

Cash and cash equivalents, at beginning of period 44 40 4

Cash and cash equivalents, at end of period $ 52 $ 44 $ 8

The decrease in net cash used in operating activities for the first quarter of 2026 compared to the first quarter of fiscal 2025 was primarily due to lower levels of cash utilized in net working capital, including lower inventory and receivable levels compared to the first quarter of fiscal 2025.

These decreases were partially offset by lower levels of cash generated by an increase in Accounts payable due to the lower inventory levels in the first quarter of fiscal 2026 and payments related to the contract termination described further in Note 4—Restructuring, Acquisition and Integration Related Expenses in the first quarter of fiscal 2026.

The decrease in net cash used in investing activities was primarily due to lower payments for capital expenditures in the first quarter of fiscal 2026.

The decrease in net cash provided by financing activities for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025 was primarily due to a decrease in net borrowings under the ABL Credit Facility resulting from the decreases in net cash used in operating activities and investing activities, as described above.

The increase in net cash provided by operating activities in fiscal 2026 year-to-date compared to fiscal 2025 year-to-date was primarily due to an increase in cash generated from net income and lower levels of cash utilized in net working capital, partially offset by payments related to the contract termination described further in Note 4—Restructuring, Acquisition and Integration Related Expenses in fiscal 2026 year-to-date.

The decrease in net cash used in investing activities in fiscal 2026 year-to-date compared to fiscal 2025 year-to-date was primarily due to lower payments for capital expenditures in fiscal 2026 year-to-date.

The increase in net cash used in financing activities in fiscal 2026 year-to-date compared to fiscal 2025 year-to-date 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 cash used in investing activities, as described above, and an increase in cash used to repurchase common stock in fiscal 2026 year-to-date.

Other Obligations and Commitments

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Pension and Other Postretirement Benefit Obligations

In fiscal 2026, no minimum pension contributions are required to be made to the SUPERVALU INC.

In fiscal 2026, no cash pension contributions are required to be made to the SUPERVALU INC.

Retirement Plan under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”).

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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”).

As of November 1, 2025, we had $138 million remaining authorized under the 2022 Repurchase Program.

We did not repurchase any shares of our common stock in the first quarter of fiscal 2026.

Under this program, we repurchased 742,622 shares of our common stock at an average price of $33.66 per share, for a total cost of $25 million in fiscal 2026.

As of January 31, 2026, we had $113 million remaining authorized under the 2022 Repurchase Program.

We will manage the timing of any repurchases of our common stock in response to market conditions and other relevant factors, including any limitations on our ability to make repurchases under the terms of our ABL Credit Facility, Term Loan Facility and Senior Notes.

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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-Q

Item 2. Management’s Discussion and Analysis