On June 7, Rhode Island-based grocery wholesaler United Natural Foods, Inc. announced it has lowered its fiscal 2023 net income outlook by tens of millions of dollars following a large drop in revenues during its fiscal 2023 third quarter.

While UNFI reported that net sales increased 3.7% to $7.5 billion during fiscal 3Q 2023, gross profit decreased $12 million, or 1.2%, to $1.0 billion. Net income during the quarter decreased 89.6% to $7 million, while earnings per diluted share (EPS) decreased 89.1% to $0.12. Adjusted EBITDA also decreased 18.9% to $159 million.

UNFI’s fiscal 3Q ended April 29. The company’s fiscal year ends July 29.

“Our third quarter results continue to demonstrate the strength of our customer value proposition as sales and product penetration increased despite significant industry headwinds,” said UNFI CEO Sandy Douglas. “However, our profitability was impacted by a greater than expected decline in gross margins reflecting a challenging operating and macroeconomic backdrop, which contributed to lower inflationary benefits primarily related to reduced procurement gains, as well as higher shrink. Because of this pressure, we are reducing fiscal 2023 outlook for adjusted EBITDA and adjusted earnings per share.”

In updating its 2023 outlook, UNFI projects consistent sales figures but a significant drop in net income. During a previous update on March 8, the company projected between $90 million and $142 million in fiscal 2023 revenue. That updated outlook now stands at $11 million to $41 million.

“Customers continue to tell us we have the right products and value added services,” Douglas said. “They’re optimistic we’re taking the appropriate actions to help them plan and execute their go-to-market strategies and continuing to improve our execution capabilities in support of their business growth. While work is underway on our longer-term improvement efforts, we’re also focused on taking immediate cost mitigation actions to improve the profitability of our business in the near term, with these near-term profitability enhancements projected to deliver over $100 million of annualized benefits. We are confident that our short and longer term actions will make UNFI a stronger, more efficient company better positioned to serve customers and suppliers and deliver increasing shareholder value.”