United Natural Foods ends pact with Key Food Co-op

United Natural Foods Inc. (NYSE:UNFI), a $1.57 billion market cap wholesale distributor with annual revenues of $31.68 billion, has announced the mutual termination of its supply agreement with Key Food Stores Co-Operative Inc., according to a recent SEC filing. The agreement, which had positioned the company as the primary grocery wholesaler for Key Food locations in the Northeast, will come to an end on or around September 20, 2025. According to InvestingPro data, the company’s stock has experienced a notable 9.93% decline over the past week.

The decision to terminate the Amended and Restated Northeast Supply Agreement, originally dated June 3, 2021, was reached in May 2025. United Natural Foods believes this development is beneficial for both parties, allowing the company to exit what it described as an unprofitable relationship while advancing toward its long-term strategic and three-year financial objectives. This strategic move comes as InvestingPro analysis shows the company currently operates with relatively weak gross profit margins of 13.4%, though its net income is expected to grow this year.

Concurrent with the termination, United Natural Foods plans to cease operations at its Allentown, Pennsylvania distribution center. This move is part of a broader effort to optimize the company’s distribution network. The company expects that the transition will improve service to local customers and suppliers. Other customers who were previously serviced from the Allentown facility will be reallocated to nearby distribution centers, which are anticipated to provide efficient and effective service. The company maintains a healthy liquidity position with a current ratio of 1.45, suggesting adequate resources to manage this transition effectively.

The information provided in the SEC filing under Item 7.01, "Regulation FD Disclosure," is furnished and not filed. It will not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, nor will it be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, unless specifically referenced in such a filing.

This move is part of United Natural Foods’ ongoing efforts to streamline operations and focus on more profitable ventures as the company seeks to strengthen its market position and financial health. The company’s stock is traded on the New York Stock Exchange under the symbol UNFI. Based on InvestingPro’s Fair Value analysis, the stock appears slightly undervalued at current levels, with additional insights and detailed valuation metrics available in the comprehensive Pro Research Report, which offers deep-dive analysis of this and 1,400+ other US stocks.

In other recent news, United Natural Foods reported a cybersecurity breach that disrupted its operations. The company identified unauthorized activity on its IT systems, leading to operational challenges and a temporary impact on its ability to fulfill customer orders. United Natural Foods has engaged third-party cybersecurity experts and notified law enforcement as part of its response plan. The breach’s full impact is still under investigation, raising concerns about the company’s cybersecurity measures among investors.

In other developments, UBS has adjusted its price target for United Natural Foods to $30 from $31, maintaining a Neutral rating. The adjustment follows the company’s positive second-quarter net sales growth and strategic realignment efforts. Meanwhile, BTIG analysts maintained a Neutral rating, noting strong sales and volume trends but expressing caution about potential growth moderation in the latter half of the year. Jefferies also revised its price target to $28 from $32, maintaining a Hold rating after United Natural Foods exceeded earnings expectations in its recent report. The company’s strategic initiatives, focusing on product-led growth, are seen as a positive step towards achieving its long-term goals.

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