S&P lifts UNFI

S&P said it upgraded United Natural Foods Inc. to B+ from B, its senior unsecured notes to B- from CCC+ and its $1.8 billion secured term loan due 2025 to BB- from B. The improved recovery rating reflects an expectation for substantial recovery (2; rounded estimate: 70%) in default.

“The upgrade reflects UNFI's improved operating performance and credit metrics. The company continued to post strong results in fiscal 2021 (ending July 31, 2021), with fourth-quarter sales increasing about 1.6% from the third quarter thanks to market share gains driven by cross-selling between the company's conventional and natural businesses and customer wins as food-at-home demand remained robust throughout the year,” S&P said in a press release.

UNFI deployed its excess cash flow, including from asset sales, to reduce net debt by more than $300 million compared to the end of fiscal 2020. “As a result, adjusted debt to EBITDA improved to 4.7x as of the end of fiscal 2021,” the agency noted.

The outlook is stable.

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