Grocery wholesaler United Natural Foods Inc ( UNFI ) stock is ticking higher after the second-quarter FY25 earnings.

The company reported a second-quarter sales increase of 4.9% year-on-year to $8.16 billion, beating the analyst consensus estimate of $7.96 billion.

Gross margin for the quarter was 13.1% versus 13.3% last year. The gross profit climbed 3.6% to $1.1 billion.

Operating income for the quarter was $27 million compared to $16 million last year. Adjusted EBITDA of $145 million improved 13.3% Y/Y. Adjusted EPS of $0.22 beat the consensus estimate of $0.19.

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“During the second quarter, we delivered solid sales growth and our sixth consecutive quarter of sequentially improving Adjusted EBITDA. We also continued to execute against our multi-year strategic plan focused on creating sustainable value for our customers and suppliers, while enhancing our profitability and free cash flow generation and reducing net leverage,” said Sandy Douglas, UNFI’s Chief Executive Officer.

The company held $44 million in cash and equivalents as of February 1. Free cash flow for the quarter totaled $193 million, and the operating cash flow was $247 million. Long-term debt was $2.06 billion at the end of the second quarter.

“We are currently working to complete the previously announced product-focused realignment of our wholesale business designed to create more customized service for our customers and suppliers,” added Douglas.

Outlook: United Natural Foods ( UNFI ) raised FY25 sales guidance from $30.6 billion – $31 billion to $31.3 billion – $31.7 billion, against the consensus of $31.116 billion.

UNFI also raised FY25 adjusted EPS guidance from $0.40 – $0.80 to $0.70 – $0.90, against an estimate of $0.73. The company also revised the Adjusted EBITDA outlook from $530 million – $580 million to $550 million – $580 million.

Price Action: UNFI shares trading higher by 3.41% at $26.71 at the last check Tuesday.

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