UNFI Realigns Regional Structure, Anticipates ‘Few to No Impacts’ for Suppliers

United Natural Foods (UNFI) will consolidate its four operating regions to three in an effort to “enhance profitability, speed decision-making and reduce administrative layers,” the company announced on Tuesday. Though the move shakes up UNFI’s business operations, the company said it does not believe it will have a significant impact on brands and suppliers.

However, the restructuring will result in a series of job cuts – expected to impact 150 employees – primarily spanning management and supervisory positions. Moving forward, UNFI’s new structure will be divided into East, Central and West regions.

“These changes are a step in our transformation plan. The regional realignment will decrease layers of administrative management, increase leaders’ span of geographic responsibility, better align us to serve customers with less complexity and support faster decision making,” said UNFI CEO Sandy Douglas, in the release. “These changes are also intended to make our company more efficient and more profitable.”

The East region, led by Kelly Sosa, will span from Maine to Florida and as far west as Tennessee, encompassing 22 distribution centers and serving more than 10,000 customers.

The Central region, which will cover the Mississippi River to the Rockies, is comprised of 21 states, 16 distribution centers and serves about 9,000 customers; that segment will be led by Tandy Harvey. Lastly, the West region, led by Bob Garibaldi, will span from Utah to Alaska, spanning 10 states from Utah to Alaska and serving nearly 11,000 customers from 14 distribution centers. All three regional presidents will continue to report directly to Steve Dietz, UNFI chief customer officer.

UNFI said it doesn’t anticipate that any suppliers will be impacted by the restructuring, explaining in a statement to NOSH that merchandising teams have been in direct communication with all suppliers about the changes. Some suppliers may hear directly from UNFI regarding potential changes such as new points of contact.

The geographic streamlining comes one week after UNFI reported a substantial drop in profitability during its Q3 2023 earnings call. During the quarter, which ended April 29, gross profit had decreased $12 million (1.2% year-over-year) while net income dropped 89.6%. As a result, the distributor has reduced its fiscal 2023 outlook.

During the earnings call, Douglas expressed “deep disappointment” in the quarterly results and spoke to potential restructuring efforts, telling investors that the company had plans to address its “profitability weakness” and would be undertaking actions to boost its annual operating margin by over $100 million.

According to UNFI, the restructuring efforts are part of its greater four-part transformation announced in March. Key initiatives within the plan include network automation and optimization, commercial value creation, digital offering enhancement as well as infrastructure unification and modernization.

The company appointed Erin Horvath to the role of COO and named Louis Martin as president of wholesale, tasking both with executing the transitions. Horvath is tasked with driving project management while Martin is spearheading the creation and development of UNFI’s digital offerings.

Last month, natural foods distributor KeHE announced plans to acquire DPI Specialty Foods, an Ontario, Canada-based food and beverage distributor, to expand its West Coast footprint. The deal will add over 1,000 DPI customers across all channels. Meanwhile, key UNFI retailer Whole Foods recently underwent similar cost-cutting measures to simplify its own regional operations.