Whole Foods Market Extends Partnership With UNFI Through 2032

United Natural Foods, Inc. (UNFI) announced recently that it has extended its wholesale partnership with Whole Foods Market until May 2032. The prior contract was set to expire in September 2027, but the new terms ensure the partnership will continue for an additional five years. Under the new agreement, UNFI will remain the primary distributor for Whole Foods Market. David Garraway, Vice President of Supply Chain for Whole Foods Market, remarked, “UNFI plays an important role in our supply chain as we continue to grow and serve more customers.”

The news of the contract extension is a significant boost for UNFI, which has faced challenges recently. During the previous contract term, Amazon acquired Whole Foods Market, leading to speculation about the future of their partnership. UNFI shares increased by almost one dollar per share following the announcement.

In April, UNFI revealed it was refinancing its senior secured term loan facility after Moody’s downgraded the company’s debt to B3 from B2, citing weak credit metrics and negative free cash flow. The amended term loan credit facility, expected to close this month, will total $500 million and extend the maturity date, modify interest rate margins, and make other adjustments. UNFI plans to use the proceeds from the amended term loan, along with borrowings from its asset-based revolving credit facility, to repay the existing term loan.

Moody’s also highlighted UNFI’s high sales concentration with Whole Foods Market and noted Amazon’s deepening relationship with SpartanNash, a UNFI competitor. Amazon has a warrant agreement that could result in Amazon owning 12% to 15% of SpartanNash stock by 2027 if certain criteria are met. Despite these challenges, the extension of the Whole Foods Market contract provides stability and a positive outlook for UNFI’s future.