Debt refinancing (UNFI)
Bloomberg reported that JP Morgan is looking to refinance United Natural Food’s upcoming debt maturities. The company seeks at least $600M to replace its term loan due in October 2025. United Natural Foods was downgraded by Moody’s one notch to B3 at the end of March due to “weaker credit metrics with high financial leverage, very weak interest coverage and negative free cash flow.” The rest of the company’s maturities are in 2027 and 2028. Yesterday was Matteo Tarditi’s, the new CFO's, first day on the job. A refinancing would go a long way to reassuring the vendor community. We are monitoring how the suppliers are dealing with United Natural Foods. Any changes from the suppliers would be challenging. UNFI is on our short list.
Grocery retail sales remain positive (KR)
Grocery store retail sales grew 1.1% YOY in March, accelerating from 0.2% in February. The two-year average slowed from 3.2% in February to 2.9%. The sector has seen sales remain positive despite the lift from food inflation fading. General merchandise stores and warehouse clubs have been outpacing the grocery channel. The risk to the grocery stores is when the competitor channels return to using their food departments as traffic drivers. Unfortunately for Kroger and Albertsons the FTC does not consider the other channels to be competitors.
