United Natural Foods Inc. reached profitability in its fiscal Q3 ended May 2, even as sales fell year over year to 4.2%.

Still, the distributor’s leadership expressed confidence in its continuing efforts to advance digital and artificial intelligence (AI) solutions for the grocers that it serves.

“Through disciplined execution of our strategy, we generated strong profitability and free cash flow while continuing to strengthen our balance sheet and increase our financial flexibility,” UNFI CEO Sandy Douglas told analysts during the company’s June 9 earnings call. “Throughout the quarter, we remain focused on helping our customers and suppliers execute their strategies in a dynamic operating environment.”

UNFI’s net sales totaled $7.72 billion in Q3, down from $8.06 billion a year earlier. Altogether, it recorded $33 million in net income for the quarter, an improvement from a $7 million loss during the same period a year ago.

Why United Natural Foods is looking to digital efforts to improve sales outcomes

Douglas stated during the earnings call that UNFI would “continue to invest in talent to accelerate our capabilities, including adding a new leader for our digital services business.” Specifically, he noted that UNFI’s digital business “includes offerings designed to help our customers and suppliers operate more effectively and to strengthen shopper engagement.”

For suppliers, he pointed to UNFI’s digital marketplace as a launch that would open up new opportunities.

“In merchandising and supplier support, we rolled out a new digital marketplace called Endless Aisle that gives retailers an easier way to access innovative emerging brands while also helping suppliers expand their reach with less friction,” Douglas said. “While it’s still early, we’re hearing positive feedback from partners who value the ability to test new products with greater flexibility, and we expect to continue to develop and test new solutions like this to help further support our stakeholders.”

How United Natural Foods is using AI

UNFI’s most prominent example of AI use is through the Relex platform. The distributor uses Relex to create what Giorgio Tarditi, president and chief financial officer at UNFI, described as “a decentralized AI-based kind of process to plan around our customers and suppliers.” Tarditi told investors during the earnings call that Relex was part of an ongoing effort to reduce “days on hand of inventory.”

Douglas pointed to other ways the company was benefiting from AI use.

“As we continue taking steps to improve effectiveness and efficiency, we’re beginning to see early benefits from the next-generation supply chain capabilities that we’re building across our network,” he stated. “For example, we expanded our AI-powered supply chain and procurement planning platform to all DCs in our network and are focused on completing the supplier-facing portion of this deployment.”

He added that the platform was “already helping to steadily improve fill rates and inventory management while also enhancing free cash flow conversion.”

Moreover, Douglas pointed to UNFI’s expanded use of the Samsara platform for AI-powered fleet management.

“We recently began using the platform’s features, including driver coaching to help strengthen driver safety processes, optimize routes and improve delivery execution,” he said. “Year-to-date through the end of the third quarter, our on-time deliveries increased by over 4% compared to the prior year period, while average miles per delivery have declined by nearly 5%.”

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