United Natural Foods, Inc. (UNFI) shares climbed Tuesday after the food distributor delivered a solid earnings beat, proving that sometimes you can miss on revenue and still make Wall Street happy.

The company reported first-quarter adjusted earnings per share of 56 cents, handily beating the analyst consensus of 41 cents. That's a 37% upside surprise, which tends to get investors' attention.

Revenue told a different story. Quarterly sales came in at $7.840 billion, down 0.4% year over year and missing the Street's expectation of $7.911 billion. But here's where it gets interesting: the miss masks some meaningful shifts underneath.

Natural channel sales climbed 10.5% to $4.24 billion, showing continued momentum in that higher-margin segment. Meanwhile, conventional channel sales dropped 11.7% to $3.33 billion, and retail sales fell 5.5% to $554 million. The company is essentially trading lower-margin conventional business for stronger natural channel performance.

Cost discipline played a major role in the earnings beat. Adjusted EBITDA hit $167 million for the quarter, up from $134 million in the same period last year. Free cash flow usage improved dramatically to $54 million from $159 million a year earlier. Capital spending also dropped to $16 million from $49 million, reflecting tighter financial management.

As of November 1, 2025, United Natural Foods had total liquidity of approximately $1.33 billion, including $38 million in cash and roughly $1.29 billion of unused capacity under its asset-based lending facility.

Looking Ahead

Management reaffirmed its fiscal 2026 guidance, projecting adjusted EPS between $1.50 and $2.30, compared to the analyst consensus of $2.03. The company also maintained its sales forecast at $31.6 billion to $32.0 billion, versus the Street estimate of $31.953 billion.

UNFI Price Action: United Natural Foods shares were up 10.68% at $38.03 at the time of publication on Tuesday.