Dive Brief:
- United Natural Foods, Inc. is optimizing its distribution center network to reduce costs and provide a more responsive service to retail customers, the company said in a securities filing this month.
- The planned changes include closing its Allentown, Pennsylvania, facility in fiscal year 2026, following the termination of an agreement with Key Food, the center’s primary customer. The closure will impact 716 employees.
- “We’ve assessed our business on a DC-by-DC basis to evaluate where we are going to see growth, where the profit opportunities exist from a service and program perspective,” CEO Sandy Douglas said in a June 10 earnings call.
Dive Insight:
UNFI is in the midst of a three-year financial recovery plan that began last year, along with a reorganization of the company’s distribution network, CFO Giorgio Tarditi told investors. UNFI launched the rescue plan after two years of unsteady financial results
Since last August, the company consolidated the volumes of two distribution centers into other facilities and closed a third center, all in the Central region of the U.S., according to the company’s securities filing. UNFI executives expect to lower operating and shrink expenses and improve product assortment with the closings
Volume from the Allentown facility will be consolidated into other Northeast centers
UNFI’s distribution network changes involve more than closures and consolidations. In the first quarter of the fiscal year, it opened a center in Manchester, Pennsylvania. A facility in Sarasota, Florida, is scheduled to open in the first half of fiscal 2026, according to the filing
The 1.3 million-square-foot Manchester facility features UNFI’s second A.I.-powered robotic warehouse automation system, developed by Symbotic. UNFI previously installed a Symbotic system in its Centralia, Washington, distribution center
Efficiency efforts within UNFI’s network included expanding the company’s lean daily management program to 20 of its 52 distribution centers, UNFI executives said in the earnings call. Lean daily management, which aims to prevent problems through proactive oversight, has lowered injury rates, reduced shrink and improved out-of-stocks by about 75%, Tarditi said.
The changes in UNFI’s distribution network are ongoing, and more are likely, the company said in the filing
UNFI’s remaking of its distribution network comes as companies shift their operations focus from expansion to efficiency. Advance Auto Parts is consolidating its distribution network into a single operation, and Calvin Klein owner PVH Corp. is consolidating its facility footprint to increase U.S. warehouse capacity utilization
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