What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-06-09 compared with 2026-03-10 · 101 added, 99 removed, 323 unchanged (38% of the section changed)

62 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, 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.

In addition, changes in pricing levels continue to affect our business, and fluctuating commodity, fuel 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 continue to monitor the impacts of the evolving macroeconomic and geopolitical landscape, including rapidly evolving tariff and global trade policies and rising fuel costs, 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.

Impact of Product Cost Changes

We experienced a mix of inflation and deflation across product categories during the third 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 four percent in the third quarter of fiscal 2026 as compared to the third quarter of fiscal 2025.

Cost inflation and deflation 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 our 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.

In an inflationary environment, rising vendor costs typically increase Net sales for wholesalers, 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.

Wholesale Distribution Network Optimization

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

Additionally, in the third quarter of fiscal 2026, we consolidated the volume of a distribution center into a nearby facility in the West region and announced the planned consolidation of a facility in the Central region, which is expected to occur in the fourth quarter of fiscal 2026.

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

We operated 66 grocery stores, including 53 Cub Foods stores and 13 Shoppers stores, as of May 2, 2026.

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

2 unchanged sentences

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 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.

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.

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.

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.

Composition of Condensed Consolidated Statements of Operations and Business Performance Assessment

31 unchanged sentences

13-Week Period Ended 39-Week Period Ended

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

(in millions) May 2, 2026 May 3, 2025 Change May 2, 2026 May 3, 2025 Change

Net sales $ 7,723 $ 8,059 $ (336) $ 23,510 $ 24,088 $ (578)

7 unchanged sentences

Interest expense, net 31 36 (5) 97 110 (13)

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

Other (income) expense, net (1) — (1) 7 (3) 10

Income (loss) before income taxes 42 (16) 58 56 (45) 101

8 unchanged sentences

13-Week Period Ended 39-Week Period Ended

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

(in millions) May 2, 2026 May 3, 2025 May 2, 2026 May 3, 2025

Net income (loss) including noncontrolling interests $ 33 $ (7) $ 49 $ (29)

4 unchanged sentences

Interest expense, net 31 36 97 110

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

Other (income) expense, net (1) — 7 (3)

Provision (benefit) for income taxes 9 (9) 7 (16)

1 unchanged sentence

Share-based compensation 18 10 45 28

LIFO charge 5 3 10 10

LIFO charge (benefit) 8 (5) 18 5

Restructuring, acquisition and integration related expenses (1)

2 unchanged sentences

Cybersecurity incident (4)

(19) — (18) —

Other adjustments (5)

1 unchanged sentence

(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.

Fiscal 2025 primarily reflects costs associated with certain employee severance and other employee separation costs, outsourcing certain corporate functions under restructuring initiatives 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.

(2) Fiscal 2026 primarily includes a $14 million non-cash asset impairment charge in the third quarter of fiscal 2026 related to the decision to close a leased retail store location, $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 a $24 million non-cash asset impairment charge related to a distribution center in our East region and 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 and insurance recoveries related to the Cybersecurity Incident.

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

See Notes to Condensed Consolidated Financial Statements for additional information.

6 unchanged sentences

13-Week Period Ended

Increase (Decrease) 26-Week Period Ended

Increase (Decrease)

(in millions, except percentages) January 31,

2026 February 1,

2025 $ % January 31,

2026 February 1,

Change 39-Week Period Ended

(in millions, except percentages) May 2,

2025 $ % May 2,

Natural $ 4,342 $ 4,160 $ 182 4.4 % $ 12,872 $ 12,019 $ 853 7.1 %

1 unchanged sentence

Retail 515 573 (58) (10.1) % 1,629 1,769 (140) (7.9) %

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

Eliminations (270) (302) 32 10.6 % (844) (953) 109 11.4 %

Total net sales $ 7,723 $ 8,059 $ (336) (4.2) % $ 23,510 $ 24,088 $ (578) (2.4) %

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.

Third Quarter

Our Net sales for the third quarter of fiscal 2026 decreased approximately 4.2% from the third 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 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.

Natural Net sales for the third quarter of fiscal 2026 increased approximately 4.4% from the third quarter of fiscal 2025.

The increase was primarily driven by a low single digit increase from inflation and a less than 1% increase in unit volumes, including new business with existing and new customers, offset by a decrease in volume from anticipated lost sales related to the unwind of short-term project-based work.

Conventional Net sales for the third quarter of fiscal 2026 decreased approximately 13.6% from the third quarter of fiscal 2025.

The decrease was driven by a mid-teens decline in unit volumes including the high single digit impact from network optimization actions, largely driven by the transition out of our Allentown, Pennsylvania distribution center completed in the first quarter of fiscal 2026, partially offset by a low single digit increase from inflation.

Retail Net sales for the third quarter of fiscal 2026 decreased approximately 10.1% from the third quarter of fiscal 2025.

The decrease was primarily driven by store closures and a 4.4% 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.

Lower eliminations of Net sales for the third quarter of fiscal 2026 as compared to the third 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 2.4% from fiscal 2025 year-to-date.

1 unchanged sentence

Natural Net sales for fiscal 2026 year-to-date increased approximately 7.1% 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.

The increase was primarily driven by a low single digit increase in unit volumes, including new business with existing and new customers, as well as a low single digit increase from inflation.

Conventional Net sales for fiscal 2026 year-to-date decreased approximately 12.4% from fiscal 2025 year-to-date.

Retail Net sales for fiscal 2026 year-to-date decreased approximately 7.9% from fiscal 2025 year-to-date.

2 unchanged sentences

Cost of Sales and Gross Profit

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 $33 million, or 3.0%, to $1,049 million for the third quarter of fiscal 2026, from $1,082 million for the third quarter of fiscal 2025.

Our Gross profit as a percentage of Net sales increased to 13.6% for the third quarter of fiscal 2026 compared to 13.4% for the third quarter of fiscal 2025.

The increase in gross profit rate was primarily driven by the positive impact of network optimization actions and customer mix, which were partially offset by a lower margin rate in the Retail segment.

Our Gross profit decreased $46 million, or 1.4%, to $3,146 million for fiscal 2026 year-to-date, from $3,192 million for fiscal 2025 year-to-date.

Our Gross profit as a percentage of Net sales increased to 13.4% for fiscal 2026 year-to-date compared to 13.3% 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.

The increase in gross profit rate was primarily driven by the positive impact of network optimization actions 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 $20 million of charges associated with the previously disclosed Cybersecurity Incident.

Operating Expenses

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 $71 million, or 6.9%, to $954 million, or 12.4% of Net sales, for the third quarter of fiscal 2026 compared to $1,025 million, or 12.7% of Net sales, for the third quarter of fiscal 2025.

The decrease in Operating expenses as a percentage of Net sales was primarily driven by $20 million in cybersecurity insurance proceeds and the benefits from cost saving initiatives, including network optimization actions and higher levels of distribution center productivity that improved labor cost rates.

Operating expenses decreased $149 million, or 4.9%, to $2,922 million, or 12.4% of Net sales, for fiscal 2026 year-to-date compared to $3,071 million, or 12.7% 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.

The decrease in Operating expenses as a percentage of Net sales was primarily driven by the benefits from cost saving initiatives, including network optimization actions and higher levels of distribution center productivity that improved labor cost rates, as well as $40 million in cybersecurity insurance recoveries, partially offset by higher costs associated with union and other employee benefits.

Restructuring, Acquisition and Integration Related Expenses

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 decreased $4 million to $10 million for the third quarter of fiscal 2026, compared to $14 million for the third quarter of fiscal 2025.

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

Restructuring, acquisition and integration related expenses increased $5 million to $40 million for fiscal 2026 year-to-date, compared to $35 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.

The increase was primarily driven by higher closed property charges and costs for fiscal 2026 year-to-date and an adjustment to previously recorded multiemployer pension plan withdrawal liabilities in the first quarter of fiscal 2026, partially offset by a decrease in certain employee severance and other employee separation costs and costs associated with outsourcing certain corporate functions under restructuring initiatives.

Loss on Sale of Assets and Other Asset Charges

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 decreased $9 million to $19 million for the third quarter of fiscal 2026, from $28 million for the third quarter of fiscal 2025.

The third quarter of fiscal 2026 primarily included a $14 million non-cash asset impairment charge related to the decision to close a leased retail store location.

The third quarter of fiscal 2025 primarily included a $24 million non-cash asset impairment charge related to the Allentown, Pennsylvania distribution center.

The third 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 $3 million to $42 million for fiscal 2026 year-to-date, from $39 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 year-to-date primarily included $29 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.

Fiscal 2025 year-to-date primarily included a $24 million non-cash asset impairment charge related to the Allentown, Pennsylvania distribution center.

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 $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 $51 million to $66 million for the third quarter of fiscal 2026, compared to Operating income of $15 million for the third quarter of fiscal 2025.

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

Reflecting the factors described above, Operating income increased $95 million to $142 million for fiscal 2026 year-to-date, compared to Operating income of $47 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.

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 Restructuring, acquisition and integration related expenses and Loss on sale of assets and other asset charges in fiscal 2026 year-to-date, each as described above.

Interest Expense, Net

13-Week Period Ended 39-Week Period Ended

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

(in millions) May 2, 2026 May 3, 2025 May 2, 2026 May 3, 2025

Interest expense on long-term debt, net of capitalized interest $ 29 $ 35 $ 92 $ 106

1 unchanged sentence

Amortization of financing costs and discounts 2 2 5 5

Loss on debt extinguishment 1 — 1 —

Interest income (1) (1) (2) (2)

Interest expense, net $ 31 $ 36 $ 97 $ 110

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 the third quarter of fiscal 2026 compared to the third 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 effective tax rate for the third quarter of fiscal 2026 was an expense rate of 21.4% on pre-tax income compared to a benefit rate of 56.3% on pre-tax loss for the third quarter of fiscal 2025.

The change from the third quarter of fiscal 2025 is primarily driven by the impact of a partnership investment entered into in the third quarter of fiscal 2025, as well as a decrease in the discrete tax benefit for return to provision tax credits in the third quarter of fiscal 2026 compared to fiscal 2025, combined with an increase in pre-tax income for the third quarter of fiscal 2026.

The effective tax rate for fiscal 2026 year-to-date was an expense rate of 12.5% on pre-tax income compared to a benefit rate of 35.6% 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.

1 unchanged sentence

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.

was $33 million, or $0.52 per diluted common share, for the third quarter of fiscal 2026, compared to Net loss attributable to United Natural Foods, Inc.

of $7 million, or $0.12 per diluted common share, for the third quarter of fiscal 2025.

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

6 unchanged sentences

13-Week Period Ended 39-Week Period Ended

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

(in millions) May 2, 2026 May 3, 2025 Increase (Decrease) May 2, 2026 May 3, 2025 Increase (Decrease)

Natural $ 146 $ 124 $ 22 $ 403 $ 323 $ 80

1 unchanged sentence

Retail (9) 1 (10) (23) 9 (32)

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.

Third Quarter

Natural Adjusted EBITDA increased $22 million, or 17.7%, for the third quarter of fiscal 2026 as compared to the third 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, 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 $24 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.

Natural gross profit rate was approximately flat primarily due to lower product margin rates and customer mix, offset by the favorable impact of supplier programs.

• Natural Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, increased $2 million.

Natural operating expense rate decreased approximately 39 basis points primarily due to the benefits from cost saving initiatives in distribution expenses and selling, general and administrative expenses and lower allocated corporate overhead driven largely by incentive compensation, partially offset by increases in distribution expenses associated with union and other employee benefits and higher fuel costs.

Conventional Adjusted EBITDA increased $17 million, or 36.2%, for the third quarter of fiscal 2026 as compared to the third 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 gross profit rate increased approximately 89 basis points driven primarily by the positive impact of network optimization actions and customer mix.

• Conventional Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $41 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.

Conventional operating expense rate increased approximately 14 basis points primarily due to the deleveraging impact of lower sales on fixed costs and increases in distribution expenses associated with union and other employee benefits, partially offset by benefits from cost saving initiatives in distribution expenses and selling, general and administrative expenses, which included the benefits of network optimization actions in distribution expenses.

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

2 unchanged sentences

• Retail Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $9 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.

Retail operating expense rate increased approximately 108 basis points primarily due to increases in occupancy-related costs and the deleveraging impact of lower sales on fixed costs, partially offset by lower labor costs from store closures.

Natural Adjusted EBITDA increased $80 million, or 24.8%, for fiscal 2026 year-to-date as compared to fiscal 2025 year-to-date.

1 unchanged sentence

• Natural Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, increased $101 million.

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 gross profit rate decreased approximately 11 basis points driven primarily by lower product margin rates and customer mix, which were partially offset through supplier programs and 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, increased $21 million.

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.

Natural operating expense rate decreased approximately 55 basis points primarily due to the benefits from cost saving initiatives in distribution expenses and selling, general and administrative expenses and the leveraging impact of higher sales, partially offset by increases in distribution expenses associated with union and other employee benefits.

Conventional Adjusted EBITDA increased $57 million, or 37.7%, for fiscal 2026 year-to-date as compared to fiscal 2025 year-to-date.

1 unchanged sentence

• Conventional Gross profit, which excludes the LIFO charge and other adjustments as outlined in Note 14—Business Segments, decreased $58 million.

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 gross profit rate increased approximately 89 basis points driven primarily by the positive impact of network optimization actions 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 $115 million.

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.

Conventional operating expense rate increased approximately 12 basis points primarily due to the deleveraging impact of lower sales on fixed costs and increases in distribution expenses associated with union and other employee benefits, partially offset by benefits from cost saving initiatives in distribution expenses and selling, general and administrative expenses, which included the benefits of network optimization actions in distribution expenses.

Retail Adjusted EBITDA decreased $32 million for fiscal 2026 year-to-date as compared to fiscal 2025 year-to-date.

3 unchanged sentences

• Retail Operating expense, which excludes depreciation and amortization, share-based compensation and other adjustments as outlined in Note 14—Business Segments, decreased $25 million.

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.

Retail operating expense rate increased approximately 60 basis points primarily due to the deleveraging impact of lower sales on fixed costs and increases in occupancy-related costs, partially offset by lower labor costs from store closures and operating efficiencies.

LIQUIDITY AND CAPITAL RESOURCES

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

• Total liquidity as of May 2, 2026 was $1,245 million and consisted of the following:

◦ $1,202 million of unused credit under our asset-based revolving credit facility (the “ABL Credit Facility”), which decreased $251 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.

◦ $43 million of cash and cash equivalents, which decreased $1 million from $44 million as of August 2, 2025.

• Total debt decreased $199 million to $1,663 million as of May 2, 2026 from $1,862 million as of August 2, 2025, primarily related to a redemption of $115 million of the aggregate principal amount of our $500 million of unsecured 6.750% senior notes due October 15, 2028 (the “Senior Notes”) in the third quarter of fiscal 2026 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 repurchases of common stock.

• Working capital decreased $19 million to $802 million as of May 2, 2026 from $821 million as of August 2, 2025, primarily due to a decrease in accounts receivable combined with a decrease in inventory levels, largely offset by a decrease in accounts payable related to lower inventory levels, an increase in prepaid expenses and other current assets and a decrease in accrued compensation and benefits.

• 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.

• In the third quarter of fiscal 2026, we entered into an amended and restated loan agreement (the “ABL Loan Agreement”), which provides for an ABL Credit Facility with an aggregate principal amount available of up to $2,530 million, including Revolver Loans (as defined in the ABL Loan Agreement) of up to $2,400 million and a First In, Last Out (“FILO”) tranche of incremental ABL loans of $130 million, and extends the maturity of our ABL Credit Facility to April 1, 2031.

Refer to Note 9—Long-Term Debt in Part I, Item 1 of this Quarterly Report on Form 10-Q for additional information.

• In fiscal 2026 year-to-date, we repurchased 824,855 shares of our common stock for a total cost of $29 million.

Sources and Uses of Cash

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Long-Term Debt

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.

During fiscal 2026 year-to-date, we reduced borrowings by a net $70 million under the ABL Credit Facility, made voluntary and mandatory prepayments on the Term Loan Facility totaling $12 million and redeemed $115 million aggregate principal amount of the Senior Notes.

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 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.

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) $204 million and (ii) 10% of the aggregate borrowing base.

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

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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 January 31, 2026.

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 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.

As of May 2, 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.

The fair values of these interest rate derivatives represent a total net liability of $0 million as of May 2, 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 January 31, 2026, we had fixed price fuel contracts and foreign currency forward agreements outstanding.

As of May 2, 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.

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39-Week Period Ended

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

(in millions) May 2, 2026 May 3, 2025 Change

Net cash provided by operating activities

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(251) (145) (106)

Effect of exchange rate on cash 1 (1) 2

Net increase in cash and cash equivalents

Net (decrease) 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 $ 43 $ 52 $ (9)

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.

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, partially offset by higher levels of cash utilized in net working capital and 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.

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 repayments of long-term debt and finance leases and an increase in cash used to repurchase common stock resulting from the increase in net cash provided by operating activities and the decrease in cash used in investing activities, as described above, partially offset by lower net repayments of borrowings under the ABL Credit Facility in fiscal 2026 year-to-date.

Other Obligations and Commitments

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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 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.

Under this program, we repurchased 82,233 shares of our common stock at an average price of $48.64 per share, for a total cost of $4 million in the third quarter of fiscal 2026 and 824,855 shares of our common stock at an average price of $35.16 per share, for a total cost of $29 million in fiscal 2026 year-to-date.

As of May 2, 2026, we had $109 million remaining authorized under the 2022 Repurchase Program.

Subsequent to the end of the third quarter of fiscal 2026, we continued to repurchase shares of our common stock, bringing total repurchases through the date of this filing to 990,026 at an average price of $37.88 per share, for a total cost of $38 million.

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