Grocery wholesaler United Natural Foods Inc (NYSE:UNFI) shares are surging after the fourth-quarter earnings.

The company reported a sales increase of 10% Y/Y to $8.15 billion, beating the analyst consensus estimate of $7.94 billion, thanks to inflation and improving unit volume that turned positive toward quarter-end.

Gross margin expanded to 13.7% from 13.0% last year on lower shrink expense. The gross profit upped 15.5% Y/Y to $1.1 billion.

Adjusted EBITDA jumped 53.8% Y/Y to $143 million. Adjusted EPS of $0.01 beat the consensus loss estimate of $0.10.

Free cash flow stood at $71 million in the quarter. As of August 3, the company had approximately $40 million in cash, plus the unused capacity of approximately $1.24 billion under its asset-based lending facility.

Outlook: United Natural Foods sees FY25 sales of $30.3 billion – $30.8 billion (vs. consensus of $30.9 billion) and adjusted EPS of $0.20-$0.80 versus the consensus of $0.57.

Sandy Douglas, UNFI's Chief Executive Officer said, “We are also actioning key elements of our updated strategy that has resulted from our ongoing board- and management-led financial review, which we expect will drive accelerating performance and create sustainable value for our customers and suppliers.”

”During fiscal 2024, we drove strong same customer growth, extended our agreement with our largest customer, realized approximately $150 million dollars in benefits from structural efficiency initiatives, significantly reduced shrink, lengthened the maturity on our term loan, and onboarded our new President and CFO, Matteo Tarditi.”

Investors can gain exposure to the stock via Northern Lights Fund Trust III Counterpoint Quantitative Equity ETF (NYSE:CPAI) and Invesco Exchange-Traded Fund Trust II Invesco S&P SmallCap 600 Revenue ETF (NYSE:RWJ).

Price Action: UNFI shares are up 9.51% at $18.42 premarket at the last check Tuesday.

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