S&P prunes UNFI

S&P said it lowered its ratings for United Natural Foods Inc. to B from B+, its term loan to B+ from BB- and its senior unsecured notes to CCC+ from B-. The 2 recovery rating on the secured debt and the 6 rating on the unsecured debt are unchanged.

“UNFI's profitability will remain pressured through fiscal 2024 amid a challenging macroeconomic backdrop. For the third quarter ended April 29, 2023, UNFI's gross margin contracted 70 basis points (bps) to 13.3% year over year, mainly due to reduced procurement gains than in 2022. In addition, increased shrink and an unfavorable sales mix shift in the quarter affected the company as consumers traded down to lower-margin products.

“UNFI now expects net income of $11 million-$41 million in fiscal 2023, down from the $90 million-$142 million it guided to in the second quarter and $247 million-$266 million in the first quarter,” S&P said in a press release.

The outlook is negative.

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