Highlights

• United Natural Foods continues to impress with its execution in the midst of the global pandemic.

• Q4 results shattered expectations again, and guidance was above Street estimates.

• UNFI remains my highest-conviction long-term holding.

Brief Commentary

UNFI became of interest prior to the Covid-19 pandemic, when messy results after their merger with Supervalu (and an onerous debt load) obscured a strong deleveraging story. Covid-19 accelerated their cash generation and debt reduction strategy, and management simultaneously secured a contract extension with Whole Foods, providing a longer runway for investor confidence in the relationship. Even without multiple expansion, the debt paydown has had the expected effect, drastically increasing UNFI’s share price.

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