UNITED NATURAL FOODS INC MANAGEMENT REPORT AND ANALYSIS OF FINANCIAL POSITION AND RESULTS OF OPERATIONS (Form 10-K)

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The following discussion and analysis should be read in conjunction with our
Consolidated Financial Statements and the notes thereto, "Risk Factors" included
in Part I, Item IA, "Forward-looking Statements" and other risks described
elsewhere in this Annual Report.

FORWARD-LOOKING STATEMENTS

This Annual Report contains forward-looking statements within the meaning of
Section 27A of the Securities Act, and Section 21E of the Exchange Act, that
involve substantial risks and uncertainties. In some cases you can identify
these statements by forward-looking words such as "anticipate," "believe,"
"could," "estimate," "expect," "intend," "may," "plan," "seek," "should,"
"will," and "would," or similar words. Statements that contain these words and
other statements that are forward-looking in nature should be read carefully
because they discuss future expectations, contain projections of future results
of operations or of financial positions or state other "forward-looking"
information.

Forward-looking statements involve inherent uncertainty and may ultimately prove
to be incorrect. These statements are based on our management's beliefs and
assumptions, which are based on currently available information. These
assumptions could prove inaccurate. You are cautioned not to place undue
reliance on forward-looking statements. Except as otherwise may be required by
law, we undertake no obligation to update or revise forward-looking statements
to reflect changed assumptions, the occurrence of unanticipated events or actual
operating results. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of various factors,
including, but not limited to:

•our dependence on principal customers;
•the relatively low margins of our business, which are sensitive to inflationary
and deflationary pressures;
•the impact and duration of the COVID-19 pandemic;
•our ability to operate, and rely on third parties to operate, reliable and
secure technology systems;
•labor and other workforce shortages and challenges;
•our ability to realize anticipated benefits of our strategic initiatives,
including any acquisitions;
•the addition or loss of significant customers or material changes to our
relationships with these customers;
•our sensitivity to general economic conditions including inflation, changes in
disposable income levels and consumer spending trends;
•our ability to continue to grow sales, including of our higher margin natural
and organic foods and non-food products, and to manage that growth;
•increased competition in our industry, including as a result of continuing
consolidation of retailers and the growth of chains, direct distribution by
large retailers and the growth of online distributors;
•our ability to timely and successfully deploy our warehouse management system
throughout our distribution centers and our transportation management system
across the Company and to achieve efficiencies and cost savings from these
efforts;
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•the potential for disruptions in our supply chain or our distribution
capabilities from circumstances beyond our control, including due to lack of
long-term contracts, severe weather, labor shortage or work stoppages or
otherwise;
•moderated supplier promotional activity, including decreased forward buying
opportunities;
•union-organizing activities that could cause labor relations difficulties and
increased costs;
•the potential for additional asset impairment charges;
•our ability to maintain food quality and safety;
•volatility in fuel costs;
•volatility in foreign exchange rates; and
•our ability to identify and successfully complete asset or business
acquisitions.

You should carefully review the risks described under "Risk Factors" included in
Part I, Item 1A, as well as any other cautionary language in this Annual Report,
as the occurrence of any of these events could have an adverse effect, which may
be material, on our business, results of operations, financial condition or cash
flows.

EXECUTIVE OVERVIEW

Business Overview

UNFI is a leading distributor of grocery and non-food products, and support
services provider to retailers in the United States and Canada. We believe we
are uniquely positioned to provide the broadest array of products and services
to customers throughout North America. Our diversified customer base includes
over 30,000 customer locations ranging from some of the largest grocers in the
country to smaller independents as well. We offer approximately 260,000 products
consisting of national, regional and private label brands grouped into six
product categories: grocery and general merchandise; produce; perishables and
frozen foods; nutritional supplements and sports nutrition; bulk and foodservice
products; and personal care items. We believe we are North America's premier
wholesaler with 56 distribution centers and warehouses representing
approximately 30 million square feet of warehouse space. We are a coast-to-coast
distributor with customers in all 50 states as well as all ten provinces in
Canada, making us a desirable partner for retailers and consumer product
manufacturers. We believe our total product assortment and service offerings are
unmatched by our wholesale competitors. We plan to continue to pursue new
business opportunities with independent retailers that operate diverse formats,
regional and national chains, as well as international customers with
wide-ranging needs. Our business is classified into two reportable segments:
Wholesale and Retail; and also includes a manufacturing division and a branded
product line division.

We are committed to executing our Fuel the Future strategy with the mission of
building a food ecosystem that is better for all by delivering great food, more
choices and fresh thinking for our customers and suppliers. Our Fuel the Future
strategy consists of six pillars and is underpinned by four focus areas, which
are detailed in Business in Part I. Item 1 of this Annual Report. Collectively,
the actions and plans behind each focus area are meant to capitalize on our
unique position in the food distribution industry, including the number and
location of distribution centers we operate, the array of services and the data
driven insights that we are able to customize for each of our customers, our
innovation platforms and the growth potential we see in each, our commitment to
our people and the planet and the positioning of our retail operations.

We expect to continue to use available capital to re-invest in our business to
support our Fuel the Future initiatives and to reduce outstanding debt and are
committed to improving our financial leverage. As our financial leverage has
declined over time, it also offers us increased flexibility to invest in growing
our business and selectively return cash to shareholders as appropriate.

We are confident that our Fuel the Future strategy will further accelerate our growth by increasing sales of products and services, providing customized data-driven solutions to help our customers run their businesses more efficiently, and contributing to customer acquisition. . We believe the key drivers of new customer growth will be the benefits of our significant scale, product and service offerings, and nationwide presence.

Trends and other factors affecting our business

Our results are impacted by macroeconomic and demographic trends, changes in the
food distribution market structure and changes in consumer behavior. We believe
food-at-home expenditures as a percentage of total food expenditures are subject
to these trends, including changes in consumer behaviors in response to social
and economic trends, such as levels of disposable income and the health of the
economy in which our customers and our stores operate.

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The U.S. economy has experienced economic volatility in recent years due to
uncertain economic conditions, which have had and we expect may continue to have
an impact on consumer confidence in the future. Consumer spending may be
impacted by levels of discretionary income and consumers trading down to a less
expensive mix of products for grocery items. In addition, inflation has
increased and continues to be unpredictable. For example, we experienced
volatility in our energy operating costs and commodity input costs of our
manufacturers impacted prices of products we procured. We believe our product
mix ranging from high-quality natural and organic products to national and local
conventional brands, including cost conscious private label brands, positions us
to serve a broad cross section of North American retailers and end customers,
and lessens any impact of shifts in consumer and industry trends in grocery
product mix.

We continued to experience a tight labor market for our warehouse and driver
associates in fiscal 2022, which has caused additional reliance on third-party
resources, incremental hiring and increases in wages, all of which led to higher
labor expenses. We believe this operating environment has been impacted by labor
force availability, in part as a result of the COVID-19 pandemic, which we refer
to as the pandemic. We continue to take actions to maintain existing employment
levels, fill open roles and prepare for future employment needs.

Uncertainty remains regarding the longer-term impact of the pandemic on our
business, as global economies, markets and supply chains respond to the ongoing
effects. We continue to monitor guidelines released by the Centers for Disease
Control and Prevention and the World Health Organization and, when appropriate,
implement mitigation measures to protect our associates, including safety
protocols and strongly encouraging vaccinations/boosters. Our results could be
impacted by, among other factors, any resurgence of infection rates and new
variants of COVID-19 with higher transmissibility, the availability and efficacy
of vaccines and treatments, actions taken by governmental authorities and other
third parties in response to the pandemic such as health and safety orders and
mandates, companies' remote work policies, any economic downturn, the impact on
capital and financial markets, food-at-home purchasing levels and other consumer
trends, each of which is uncertain. Any of these disruptions could adversely
impact our business and results of operations.

We believe that changes in work being done outside of the traditional office
setting will continue to contribute to more food being consumed at home. The
impact of the pandemic, also drove growth in eCommerce utilization by grocery
consumers. We have benefited from this trend through the growth of our
traditional eCommerce customers, our online marketplace connecting suppliers and
retailers, and our EasyOptions website, which directly services non-traditional
customers. We are also impacted by changes in food distribution trends affecting
our Wholesale customers, such as direct store deliveries and other methods of
distribution. Our Wholesale customers manage their businesses independently and
operate in a competitive environment.

Network of wholesale distribution centers

We are evaluating our distribution center network to optimize its performance and expect to incur additional expenses related to any future realignment, expansion or enhancement of the network and strive to both minimize these costs and obtain new business to further improve the efficiency of our distribution network, which is undergoing a major transformation.

In fiscal 2022, our Allentown, Pennsylvania distribution center began operations, with a capacity of 1.3 million square feet to serve customers in the surrounding geographic area. We incurred start-up costs and operating losses as the volume of this facility reached operating capacity.

Retail operations

We currently operate 73 continuing operations Retail grocery stores, including
54 Cub Foods corporate stores and 19 Shoppers Food Warehouse stores. In
addition, we supply another 26 Cub Foods stores operated by our Wholesale
customers through franchise and equity ownership arrangements. We operate 81
pharmacies primarily within our stores we operate and the stores of our
franchisees. In addition, we operate 23 "Cub Wine and Spirit" and "Cub Liquor"
stores.

We're committed to investing in our Retail segment in areas such as
customer-facing merchandising initiatives, physical facilities, technology, and
operational tools. Cub Foods and Shoppers Food Warehouse also invested in
improving the customer and associate experience through express remodels focused
on customer facing elements; 14 projects were completed in fiscal 2022 with a
majority finishing in the fourth quarter of fiscal 2022.

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Impact of Inflation

We experienced a mix of inflation across product categories during fiscal 2022.
In the aggregate across our businesses, including the mix of products,
management estimates our businesses experienced product cost inflation of
approximately six percent in fiscal 2022. Cost inflation estimates are based on
individual like items sold during the periods being compared. Changes in
merchandising, customer buying habits and competitive pressures create inherent
difficulties in measuring the impact of inflation on Net sales and Gross profit.
Absent any changes in units sold or the mix of units sold, inflation generally
has the effect of increasing sales. Under the last-in, first out ("LIFO") method
of inventory accounting, product cost increases are recognized within Cost of
sales based on expected year-end inventory quantities and costs, which has the
effect of decreasing Gross profit and the carrying value of inventory during
periods of inflation.

Our pricing to our customers is determined at the time of sale primarily based
on the then prevailing vendor listed base cost, and includes discounts we offer
to our customers. Generally, in an inflationary environment as a wholesaler,
rising vendor costs result in higher Net sales driven by higher vendor prices
when other variables such as quantities sold and vendor promotions are constant.
In addition, as discussed above, we have experienced higher costs of services
from labor, transportation and other services expenses.

Composition of Consolidated Statements of Operations and Business Performance
Assessment
Net sales
Our Net sales consist primarily of product sales of natural, organic, specialty,
produce and conventional grocery and non-food products, and support services
revenue from retailers, adjusted for customer volume discounts, vendor
incentives when applicable, returns and allowances, and professional services
revenue. Net sales also include amounts charged by us to customers for shipping
and handling and fuel surcharges.

Cost of sales and Gross profit
The principal components of our Cost of sales include the amounts paid to
suppliers for product sold, plus transportation costs necessary to bring the
product to, or move product between, our distribution centers and retail stores,
partially offset by consideration received from suppliers in connection with the
purchase or promotion of the suppliers' products. Our gross margin may not be
comparable to other similar companies within our industry that may include all
costs related to their distribution network in their costs of sales rather than
as operating expenses.

Operating expenses
Operating expenses include distribution expenses of warehousing, delivery,
purchasing, receiving, selecting, and outbound transportation expenses, and
selling and administrative expenses. These expenses include salaries and wages,
employee benefits, occupancy, insurance, depreciation and amortization expense,
and share-based compensation expense.

Restructuring, acquisition and integration related expenses
Restructuring, acquisition and integration related expenses reflect expenses
resulting from restructuring activities, including severance costs, facility
closure asset impairment charges and costs, share-based compensation
acceleration charges and acquisition and integration related expenses.
Integration related expenses include certain professional consulting expenses
related to business transformation and incremental expenses related to combining
facilities required to optimize our distribution network as a result of
acquisitions.

Net periodic benefit income, excluding service cost Net periodic benefit income, excluding service cost, reflects the recognition of expected returns on benefit plan assets and interest expense on plan liabilities.

Interest expense, net
Interest expense, net includes primarily interest expense on long-term debt, net
of capitalized interest, loss on debt extinguishment, interest expense on
finance lease obligations, amortization of financing costs and discounts, and
interest income.
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Contents

Adjusted EBITDA
Our Consolidated Financial Statements are prepared and presented in accordance
with generally accepted accounting principles in the United States ("GAAP"). In
addition to the GAAP results, we consider certain non-GAAP financial measures to
assess the performance of our business and understand underlying operating
performance and core business trends, which we use to facilitate operating
performance comparisons of our business on a consistent basis over time.
Adjusted EBITDA is provided as a supplement to our results of operations and
related analysis, and should not be considered superior to, a substitute for or
an alternative to, any financial measure of performance prepared and presented
in accordance with GAAP. Adjusted EBITDA excludes certain items because they are
non-cash items or items that do not reflect management's assessment of ongoing
business performance.

We believe Adjusted EBITDA is useful to investors and financial institutions
because it provides additional information regarding factors and trends
affecting our business, which are used in the business planning process to
understand expected operating performance, to evaluate results against those
expectations, and because of its importance as a measure of underlying operating
performance, as the primary compensation performance measure under certain
compensation programs and plans. We believe Adjusted EBITDA is reflective of
factors that affect our underlying operating performance and facilitate
operating performance comparisons of our business on a consistent basis over
time. Investors are cautioned that there are material limitations associated
with the use of non-GAAP financial measures as an analytical tool. Certain
adjustments to our GAAP financial measures reflected below exclude items that
may be considered recurring in nature and may be reflected in our financial
results for the foreseeable future. These measurements and items may be
different from non-GAAP financial measures used by other companies. Adjusted
EBITDA should be reviewed in conjunction with our results reported in accordance
with GAAP in this Annual Report.

There are important limitations to the use of Adjusted EBITDA as a financial measure, including, but not limited to, the fact that it does not reflect the cost of cash expenditures for capital assets or certain other contractual commitments, l finance lease obligation and debt service expenses, income taxes and any impact of changes in working capital.

We define Adjusted EBITDA as a consolidated measure inclusive of continuing and
discontinued operations results, which we reconcile by adding Net income (loss)
from continuing operations, less Net income attributable to noncontrolling
interests, plus Non-operating income and expenses, including Net periodic
benefit income, excluding service cost, Interest expense, net and Other, net,
plus Provision (benefit) for income taxes and Depreciation and amortization all
calculated in accordance with GAAP, plus adjustments for Share-based
compensation, non-cash LIFO charge or benefit, Restructuring, acquisition and
integration related expenses, Goodwill impairment charges, (Gain) loss on sale
of assets, certain legal charges and gains, certain other non-cash charges or
other items, as determined by management, plus Adjusted EBITDA of discontinued
operations calculated in a manner consistent with the results of continuing
operations, outlined above.

During fiscal 2022, we revised our definition of Adjusted EBITDA to exclude the
impact of the non-cash LIFO charge or benefit. We believe that this change
provides a better indicator of our underlying operating performance and permits
better comparability between periods. Refer to footnote four in the table below
and Note 16-Business Segments in Part II, Item 8 of this Annual Report for
additional information regarding the impact of the change in definition of
Adjusted EBITDA.

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Assessment of Our Business Results

The following table sets forth a summary of our results of operations and
Adjusted EBITDA for the periods indicated. We have revised the following tables
for the change in segment profit measurement for Adjusted EBITDA as discussed in
Note 16-Business Segments within Part II, Item 8 of this Annual Report.

                                                                                                               Increase (Decrease)
                                               2022                 2021                 2020
(in millions)                               (52 weeks)           (52 weeks)           (52 weeks)              2022                2021
Net sales                                 $    28,928          $    26,950          $    26,559          $      1,978          $   391
Cost of sales                                  24,746               23,011               22,670                 1,735              341
Gross profit                                    4,182                3,939                3,889                   243               50
Operating expenses                              3,825                3,593                3,552                   232               41
Goodwill impairment charges                         -                    -                  425                     -             (425)
Restructuring, acquisition and
integration related expenses                       21                   56                   87                   (35)             (31)
(Gain) loss on sale of assets                     (87)                  (4)                  18                   (83)             (22)
Operating income (loss)                           423                  294                 (193)                  129              487
Net periodic benefit income, excluding
service cost                                      (40)                 (85)                 (39)                   45              (46)
Interest expense, net                             155                  204                  192                   (49)              12
Other, net                                         (2)                  (8)                  (4)                    6               (4)
Income (loss) from continuing operations
before income taxes                               310                  183                 (342)                  127              525
Provision (benefit) for income taxes               56                   34                  (91)                   22              125
Net income (loss) from continuing
operations                                        254                  149                 (251)                  105              400
Income (loss) from discontinued
operations, net of tax                              -                    6                  (18)                   (6)              24
Net income (loss) including
noncontrolling interests                          254                  155                 (269)                   99              424
Less net income attributable to
noncontrolling interests                           (6)                  (6)                  (5)                    -               (1)
Net income (loss) attributable to United
Natural Foods, Inc.                       $       248          $       149          $      (274)         $         99          $   423

Adjusted EBITDA                           $       829          $       770          $       691          $         59          $    79





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The following table reconciles Adjusted EBITDA to Net income (loss) from
continuing operations and to Income (loss) from discontinued operations, net of
tax.

                                                                 2022                2021                 2020
(in millions)                                                 (52 weeks)          (52 weeks)           (52 weeks)
Net income (loss) from continuing operations                 $      254     

$149 ($251)
Adjustments to net earnings (loss) from continuing operations: less net earnings attributable to non-controlling interests

             (6)                 (6)                  (5)
Net periodic benefit income, excluding service cost(1)              (40)                (85)                 (39)
Interest expense, net                                               155                 204                  192
Other, net                                                           (2)                 (8)                  (4)
Provision (benefit) for income taxes(2)                              56                  34                  (91)
Depreciation and amortization                                       285                 285                  282
Share-based compensation                                             43                  49                   34
Goodwill impairment charges(3)                                        -                   -                  425
LIFO charge(4)                                                      158                  24                   18

Restructuring, acquisition and integration costs(5)

                                                          21                  56                   87
(Gain) loss on sale of assets(6)                                    (87)                 (4)                  18
Multiemployer pension plan withdrawal (benefit) charges(7)           (8)                 63                    -
Notes receivable charges(8)                                           -                   -                   13
Legal reserve charge, net of settlement income(9)                     -                   -                    1
Other retail expense(10)                                              -                   5                    1
Adjusted EBITDA of continuing operations                            829                 766                  681
Adjusted EBITDA of discontinued operations(11)                        -                   4                   10
Adjusted EBITDA                                              $      829     

$770 $691

Profit (loss) from discontinued operations, after tax(11) – $

      $        6          $       (18)
Adjustments to discontinued operations net income (loss):

Benefit for income taxes                                              -                  (1)                  (5)

Restructuring, store closure and other charges, net(12)               -                  (1)                  33
Adjusted EBITDA of discontinued operations(11)               $        -     

$4 $10


(1)Fiscal 2021 includes a postretirement settlement gain of $17 million
associated with the termination of remaining corporate plans. Fiscal 2020
includes a lump sum defined benefit pension plan settlement expense of $11
million associated with the acceleration of a portion of the accumulated
unrecognized actuarial loss as a result of the lump sum settlement payments.
(2)Fiscal 2020 includes the tax benefit from the Coronavirus Aid, Relief, and
Economic Security ("CARES") Act, which includes the impact of tax loss
carrybacks to 35% tax years allowed under the CARES Act.
(3)Fiscal 2020 primarily reflects a goodwill impairment charge attributable to a
reorganization of our reporting units and a sustained decrease in market
capitalization and enterprise value of the Company, resulting in a decline in
the estimated fair value of the U.S. Wholesale reporting unit. In addition, this
charge includes a goodwill finalization charge attributable to the Supervalu
acquisition and an asset impairment charge. Refer to Note 6-Goodwill and
Intangible Assets, Net in Part II, Item 8 of this Annual Report for additional
information.
(4)During fiscal 2022, we revised our definition of Adjusted EBITDA to exclude
the impact of the non-cash LIFO charge. The following illustrates the impact of
the revised definition on previously reported periods to show the effect of this
change:
                                                                    2021                  2020
(in millions)                                                    (52 weeks)            (52 weeks)

Adjusted EBITDA from continuing operations (previously published definition)

                                                    $        742          $        663
LIFO charge                                                              24                    18
Adjusted EBITDA of continuing operations (current definition)           766                   681
Adjusted EBITDA of discontinued operations                                4                    10
Adjusted EBITDA (current definition)                           $        770 

$691

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(5)Fiscal 2022 and fiscal 2021 primarily reflects costs associated with advisory
and transformational activities to position our business for further
value-creation. In addition, fiscal 2021 includes costs associated with
distribution center consolidations. Fiscal 2020 primarily reflects Shoppers
asset impairment charges, closed property and distribution center impairment
charges and costs, and administrative fees associated with integration
activities. Refer to Note 4-Restructuring, Acquisition and Integration Related
Expenses in Part II, Item 8 of this Annual Report for additional information.
(6)Fiscal 2022 primarily reflects the gain on sale of our Riverside, California
distribution center in the third quarter of fiscal 2022. Fiscal 2020 primarily
reflects a $50 million accumulated depreciation and amortization charge related
to the requirement to move Retail from discontinued operations to continuing
operations, partially offset by $32 million of gains on the sale of distribution
centers and other assets.
(7)Fiscal 2022 reflects an adjustment to multiemployer withdrawal charge
estimates. Fiscal 2021 includes charges related to withdrawal liabilities from
three Retail multiemployer pension plans.
(8)Reflects reserves and charges for notes receivable issued by Supervalu prior
to our acquisition to finance the purchase of stores by its customers.
(9)Reflects a charge to settle a legal proceeding and income received to settle
a separate legal proceeding.
(10)Reflects expenses associated with event-specific damages to certain retail
stores.
(11)We believe the inclusion of discontinued operations results within Adjusted
EBITDA provides investors a meaningful measure of performance.
(12)Amounts represent store closure charges and costs, operational wind-down and
inventory charges, and asset impairment charges related to discontinued
operations. Fiscal 2021 also reflects income related to a severance benefit.


The following includes a comparison of our consolidated results of operations,
our segment results and financial position for fiscal years 2022 and 2021. For a
comparison of our consolidated results of operations, segment results and
financial position for fiscal years 2021 and 2020, see Item 7 of Part II,
"Management's Discussion and Analysis of Financial Condition and Results of
Operations", in our Annual Report on Form 10-K for the fiscal year ended July
31, 2021, filed with the Securities and Exchange Commission on September 28,
2021.

RESULTS OF OPERATIONS

Year ended July 30, 2022 (financial year 2022) compared to the financial year ended
July 31, 2021 (financial year 2021)

Net sales

Our net revenue by customer channel was as follows (in millions except percentages):

                               2022                   2021                      Increase (Decrease)
Customer Channel(1)         (52 weeks)             (52 weeks)       $              %
Chains                     $    12,562            $    12,104             $              458        3.8  %
Independent retailers            7,360                  6,638                            722       10.9  %
Supernatural                     5,719                  5,050                            669       13.2  %
Retail                           2,468                  2,442                             26        1.1  %
Other                            2,402                  2,300                            102        4.4  %
Eliminations                    (1,583)                (1,584)                             1       (0.1) %
Total net sales            $    28,928            $    26,950             $            1,978        7.3  %

(1)Refer to Note 3 – Recognition of revenue in Part II, point 8 of this annual report for our channel definitions and additional information.


Our Net sales for fiscal 2022 increased 7.3% from fiscal 2021. The increase in
Net sales for fiscal 2022 was primarily driven by inflation and new business
from both existing and new customers, including the benefit of cross-selling,
partially offset by supply chain challenges and reduced unit sales growth.

Net channel sales increased primarily due to growth in sales to existing customers, including an increase in higher product costs, which resulted in higher wholesale prices to our customers, partially offset by challenges supply chain and reduced unit sales growth.

Independent retailers Net sales increased primarily due to sales under a supply
agreement with a new customer for East Coast locations commencing in the first
quarter of fiscal 2022 and growth in sales to existing customers, including an
increase from higher product costs, which drove higher wholesale selling prices
to our customers, partially offset by supply chain challenges and reduced unit
sales growth.
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Contents

Supernatural Net sales increased primarily due to sales growth at existing stores, including the offering of new product categories previously impacted by the pandemic and new fresh product categories, such as bulk and used ingredients. for prepared foods, inflation and increased sales in new stores.

Retail net sales increased primarily due to a 0.9% increase in same store sales due to higher average basket sizes, including an increase in higher product costs.

Other net sales increased mainly due to a $93 million increased sales to e-commerce customers.

Eliminations Net sales mainly relate to Wholesale to Retail sales.

Cost of sales and gross profit

Our Gross profit increased $243 million, or 6.2%, to $4,182 million in fiscal
2022, from $3,939 million in fiscal 2021. Our Gross profit as a percentage of
Net sales decreased slightly to 14.5% in fiscal 2022 compared to 14.6% in fiscal
2021. The LIFO charge was $158 million and $24 million in fiscal 2022 and fiscal
2021, respectively. Excluding the non-cash LIFO charge, Gross profit rate was
15.0% of Net sales and 14.7% of Net sales for fiscal 2022 and fiscal 2021,
respectively. The increase in the Gross profit rate, excluding the LIFO charge,
was driven by improvements in the Wholesale segment margin rate, including the
impact of inflation and the Company's efficiency initiatives, partially offset
by approximately 60 basis points from changes in certain larger customer mix.

Functionnary costs

Operating expenses increased $232 million, or 6.5%, to $3,825 million, or 13.2%
of Net sales, in fiscal 2022 compared to $3,593 million, or 13.3% of Net sales,
in fiscal 2021. Operating expenses in fiscal 2022 included an $8 million Retail
multiemployer pension plan withdrawal benefit, compared to a $63 million Retail
multiemployer pension plan withdrawal charge in fiscal 2021 discussed below.
Excluding the multiemployer pension plan withdrawal impacts in both periods,
Operating expenses were 13.3% and 13.1% in fiscal 2022 and 2021, respectively.
The remaining 20 basis point increase in Operating expenses as a percent of Net
sales was primarily driven by continued investments in servicing our customers,
which led to approximately 50 basis points of higher transportation expenses and
distribution labor costs in fiscal 2022, higher occupancy costs, and the
temporary, voluntary closure of a distribution center in the first quarter of
fiscal 2022. These increases were partially offset by leveraging fixed expenses
and the non-recurrence of distribution center start-up and consolidation costs
incurred in the Pacific Northwest last year.

In fiscal 2021, our Retail optimization efforts included updating our benefit
plan offerings to a defined contribution plan as a replacement for three
multiemployer pension plans to which we contributed pursuant to Cub Foods
collective bargaining agreements. In fiscal 2021, we withdrew from participating
in these Retail multiemployer pension plans, resulting in a $63 million
withdrawal charge. This estimated withdrawal liability was adjusted to $55
million in fiscal 2022, resulting in the benefit discussed above. It is possible
we could incur withdrawal liabilities for certain additional multiemployer
pension plan obligations in the future as we negotiate new collective bargaining
agreements with a number of our unions in normal course.

Restructuring, acquisition and integration expenses

Restructuring, acquisition and integration related expenses were $21 million for
fiscal 2022, which primarily included integration costs associated with
transformational and advisory activities to position our business for further
value creation. Expenses for fiscal 2021 were $56 million, which included $50
million of integration costs primarily associated with advisory and
transformational activities to position our business for further value creation
following the Supervalu acquisition and $6 million of closed property charges.

Gain on sale of assets

Gain on sale of assets was $87 million in fiscal 2022, which increased $83
million from $4 million in fiscal 2021. During fiscal 2022, we acquired the real
property of our Riverside, California distribution center for approximately $153
million. Immediately following this acquisition, we monetized this property
through a sale-leaseback transaction, pursuant to which we received $225 million
in aggregate proceeds for the sale of the property, which represented the fair
value of the property. Under the terms of the sale-leaseback agreement, we
entered into a lease for the distribution center for a term of 15 years. We
recorded a pre-tax Gain on sale of approximately $87 million in fiscal 2022 as a
result of the transactions, which primarily reflects the pre-tax net proceeds.
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Contents

Operating result

Reflecting the factors described above, Operating income increased $129 million
to $423 million in fiscal 2022, from $294 million in fiscal 2021. The increase
in Operating income was primarily driven by an increase in Gross profit, Gain on
sale of assets and lower Restructuring, acquisition and integration related
expenses, partially offset by an increase in Operating expenses.

Net income from periodic benefits, excluding cost of services

Net periodic benefit income, excluding service cost decreased $45 million to $40
million in fiscal 2022, from $85 million in fiscal 2021. The decrease in Net
periodic benefit income, excluding service cost was primarily driven by
$22 million of lower income from expected returns on plan assets from a higher
target investment allocation to fixed income assets in 2022 and a $17 million
settlement gain for the purchase of an irrevocable annuity to settle
participants' post-employment obligations in fiscal 2021.

Interest Expense, Net

                                                               2022                2021               Increase
(in millions)                                               (52 weeks)          (52 weeks)           (Decrease)
Interest expense on long-term debt, net of
capitalized interest                                       $      126          $      143          $        (17)
Interest expense on finance lease obligations                      11                  19                    (8)
Amortization of financing costs and discounts                      12                  13                    (1)
Loss on debt extinguishment                                         7                  30                   (23)
Interest income                                                    (1)                 (1)                    -
Interest expense, net                                      $      155          $      204          $        (49)


Lower interest expense on long-term debt, net of capitalized interest, for fiscal 2022 compared to fiscal 2021 is primarily due to lower outstanding debt balances and lower net interest charges related to our interest rate swap portfolio.

The decrease in loss on debt extinguishment costs primarily reflects the
acceleration of unamortized debt issuance costs and original issue discounts
related to mandatory and voluntary prepayments on the Term Loan Facility made in
fiscal 2021. Refer to Note 9-Long-Term Debt in Part II, Item 8 of this Annual
Report for further information.

Provision for income taxes

The effective income tax rate for continuing operations was an expense of 18.1%
compared to an expense of 18.6% in fiscal 2022 and 2021, respectively. For
fiscal 2022, the effective tax rate was reduced by the impact of discrete tax
benefits related to employee stock awards and the release of unrecognized tax
positions, partially offset by non-deductible executive compensation. For fiscal
2021, the effective tax rate was reduced by solar and employment tax credits,
including the tax credit impact of a fiscal 2021 investment in an equity method
partnership, the recognition of previously unrecognized tax benefits, excess tax
deductions attributable to share-based compensation and inventory deductions, as
well as the impact of favorable return-to-provision adjustments.

Income from discontinued operations, net of tax

The results of discontinued operations for fiscal 2021 reflect Net sales of $42
million for which we recognized $14 million of Gross profit and $9 million of
Income from discontinued operations, net of tax. Discontinued operations results
of operations in fiscal 2022 were insignificant. Refer to Note 18-Discontinued
Operations in Part II, Item 8 of this Annual Report for additional information.

Net income attributable to United Natural Foods, Inc.

Reflecting the factors described in more detail above, Net income attributable
to United Natural Foods, Inc. was $248 million, or $4.07 per diluted common
share, in fiscal 2022, compared to $149 million, or $2.48 per diluted common
share, in fiscal 2021.

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Segment Results of Operations

In evaluating financial performance in each business segment, management
primarily uses Net sales and Adjusted EBITDA of its business segments as
discussed and reconciled within Note 16-Business Segments within Part II, Item 8
of this Annual Report and the above table within the Executive Overview section.
The following tables set forth Net sales and Adjusted EBITDA by segment for the
periods indicated.

                                                                                                                Increase (Decrease)
                                               2022                 2021                 2020
(in millions)                               (52 weeks)           (52 weeks)           (52 weeks)              2022                2021
Net sales:
Wholesale                                 $    27,824          $    25,873          $    25,525          $      1,951          $    348
Retail                                          2,468                2,442                2,375                    26                67
Other                                             219                  219                  228                     -                (9)
Eliminations                                   (1,583)              (1,584)              (1,569)                    1               (15)
Total Net sales                           $    28,928          $    26,950          $    26,559          $      1,978          $    391
Continuing operations Adjusted
EBITDA:
Wholesale(1)                              $       696          $       677          $       610          $         19          $     67
Retail(1)                                          98                   98                   89                     -                 9
Other                                              44                  (10)                 (16)                   54                 6
Eliminations                                       (9)                   1                   (2)                  (10)                3
Total continuing operations
Adjusted EBITDA                           $       829          $       766          $       681          $         63          $     85


(1)Adjusted EBITDA amounts as previously reported by segment have been recast to
conform with the revised segment profit measure of Adjusted EBITDA, which
excludes the non-cash LIFO charge. The effect of the revision increased Adjusted
EBITDA for Wholesale and Retail by $23 million and $2 million in fiscal 2021,
respectively, decreased Adjusted EBITDA of Other by $1 million in fiscal 2021,
and increased Adjusted EBITDA of Wholesale and Retail in fiscal 2020 by
$17 million and $1 million, respectively.


Net sales

Wholesale's Net sales increased in fiscal 2022 as compared to fiscal 2021
primarily due to growth in sales to existing customers, including an increase
from higher product costs, in Independent retailers, Supernatural and Chains, as
discussed in Results of Operations- Fiscal year ended July 30, 2022 (fiscal
2022) compared to fiscal year ended July 31, 2021 (fiscal 2021) - Net Sales
above.

Retail net sales increased for fiscal 2022 compared to fiscal 2021, primarily due to a 0.9% increase in same store sales due to higher average basket sizes, including an increase in higher product costs.

Adjusted EBITDA

Wholesale's Adjusted EBITDA increased 3% in fiscal 2022 as compared to fiscal
2021. The increase was driven by gross profit expansion, excluding the LIFO
charge, in excess of higher operating costs. Wholesale's Gross profit increase
excluding the LIFO charge for fiscal 2022 was $386 million and gross profit rate
increased approximately 51 basis points driven by margin rate expansion from the
benefits of inflation and the Company's ValuePath initiative, which was
partially offset by changes in customer mix. Wholesale's Operating expense
increased $366 million, which excludes depreciation and amortization,
share-based compensation, LIFO charge and other adjustments as outlined in Note
16-Business Segments. Wholesale's operating expense rate increased 62 basis
points primarily driven by continued investments in servicing our customers,
which led to approximately 50 basis points of higher transportation expenses and
distribution labor costs in fiscal 2022, higher occupancy costs, and the
temporary, voluntary closure of a distribution center in the first quarter of
fiscal 2022. These increases were partially offset by leveraging fixed expenses
and distribution center start-up and consolidation costs incurred in the Pacific
Northwest last year. Wholesale's depreciation expense increased $2 million
compared to fiscal 2021.

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Retail's Adjusted EBITDA was unchanged in fiscal 2022 as compared to fiscal
2021. Retail's Gross profit dollar growth excluding the LIFO charge in fiscal
2022 was $12 million and its gross profit rate increased 20 basis points from
lower promotional activity. This increase was primarily offset by higher
employee and occupancy costs. Retail's Adjusted EBITDA excludes depreciation and
amortization, share-based compensation, LIFO charge and other adjustments as
outlined in Note 16-Business Segments in Part II, Item 8 of this Annual Report.
Retail's depreciation and amortization expense was unchanged compared to fiscal
2021.

Other Adjusted EBITDA increased by 540% in fiscal 2022, primarily due to lower corporate overhead, including pandemic-related costs and administrative expenses.

CASH AND CAPITAL RESOURCES

Strong points

•Total liquidity as of July 30, 2022 was $1,671 million and consisted of the
following:
•Unused credit under our $2,600 million secured asset-based revolving credit
facility (the "ABL Credit Facility", described below) was $1,627 million as of
July 30, 2022, which increased $347 million from $1,280 million as of July 31,
2021, primarily due to entering into a new, larger ABL Facility in the fourth
quarter of fiscal 2022 as described below, partially offset by cash utilized to
fund a voluntary prepayment on the Term Loan Facility (described below).
•Cash and cash equivalents was $44 million as of July 30, 2022, which increased
$3 million from $41 million as of July 31, 2021.
•Our total debt decreased $65 million to $2,123 million as of July 30, 2022
from $2,188 million as of July 31, 2021, primarily driven by debt repayments
from net cash flow contributions from operating activities and net proceeds from
asset sales, partially offset by payments for capital expenditures during fiscal
2022.
•In the second quarter of fiscal 2022, we made a voluntary prepayment of $150
million on the term loan agreement (the "Term Loan Agreement") related to our
$1,950 million term loan facility (the "Term Loan Facility") funded with
incremental borrowings under the ABL Credit Facility that reduced our interest
costs. Also in the second quarter of fiscal 2022, prior to transitioning to
Secured Overnight Financing Rates ("SOFR"), we amended our Term Loan Agreement
to reduce the applicable margin for London Interbank Offered Rate ("LIBOR") and
base rate loans under the Term Loan Facility by 25 basis points.
•In the third quarter of fiscal 2022, we acquired the real property of our
Riverside, California distribution center for approximately $153 million, which
reduced our Current portion of long-term debt and finance lease liabilities by
$96 million with the remainder primarily reducing our Accrued expenses and other
current liabilities. Immediately following this acquisition, we monetized this
property through a sale-leaseback transaction, pursuant to which we received
$225 million in aggregate proceeds for the sale of the property. In March 2022,
we made a $44 million voluntary prepayment on the Term Loan Facility from the
after-tax net proceeds from the transactions.
•In the fourth quarter of fiscal 2022, we entered into a new loan agreement (the
"ABL Loan Agreement"), which provides for a $2,600 million ABL Credit Facility
with an extended maturity to fiscal 2027, and we used borrowings thereunder to
repay all amounts outstanding under and terminate the then outstanding ABL
credit facility. Our total available liquidity increased by $500 million in
connection with this refinancing, which reflects our borrowing base levels at
closing. The ABL Loan Agreement utilizes Term SOFR and Prime rates as the
benchmark interest rates. Borrowings under the ABL Loan Agreement bear interest
at rates that, at the applicable borrowers' option, can be either: (i) a base
rate plus a 0.00% - 0.25% margin or (ii) a Term SOFR rate plus a 1.00% - 1.25%
margin. Refer to Note 9-Long-Term Debt in Part II, Item 8 of this Annual Report.
Also in the fourth quarter of fiscal 2022, we amended the Term Loan Agreement to
change the Term Loan Facility reference rate from LIBOR to Term SOFR.
•In fiscal 2023, scheduled debt maturities are expected to be $14 million. Based
on our Consolidated First Lien Net Leverage Ratio (as defined in the Term Loan
Agreement) at the end of fiscal 2022, no prepayment from Excess Cash Flow in
fiscal 2022 is required to be made in fiscal 2023.
•Working capital increased $317 million to $1,380 million as of July 30, 2022
from $1,063 million as of July 31, 2021, primarily due to the increase in
inventory and accounts receivable levels related to new customers and sales
growth of existing customers combined with the decrease in the current portion
of finance lease liabilities and accrued expenses related to the contractual
requirement to acquire the Riverside, California distribution center discussed
above, which were partially offset by an increase in accounts payable related to
inventories.

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Sources and Uses of Cash

We expect to continue to replenish operating assets and pay down debt
obligations with internally generated funds. A significant reduction in
operating earnings or the incurrence of operating losses could have a negative
impact on our operating cash flow, which may limit our ability to pay down our
outstanding indebtedness as planned. Our credit facilities are secured by a
substantial portion of our total assets. We expect to be able to fund debt
maturities and finance lease liabilities through fiscal 2023 with internally
generated funds and borrowings under the ABL Credit Facility.

Our primary sources of liquidity are from internally generated funds and from
borrowing capacity under the ABL Credit Facility. We believe our short-term and
long-term financing abilities are adequate as a supplement to internally
generated cash flows to satisfy debt obligations and fund capital expenditures
as opportunities arise. Our continued access to short-term and long-term
financing through credit markets depends on numerous factors, including the
condition of the credit markets and our results of operations, cash flows,
financial position and credit ratings.

Primary uses of cash include debt service, capital expenditures, working capital
maintenance and income tax payments. We typically finance working capital needs
with cash provided from operating activities and short-term borrowings.
Inventories are managed primarily through demand forecasting and replenishing
depleted inventories.

We currently do not pay a dividend on our common stock. In addition, we are
limited in the aggregate amount of dividends that we may pay under the terms of
our Term Loan Facility, ABL Credit Facility and Senior Notes. Subject to certain
limitations contained in our debt agreements and as market conditions warrant,
we may from time to time refinance indebtedness that we have incurred, including
through the incurrence or repayment of loans under existing or new credit
facilities or the issuance or repayment of debt securities. Proceeds from the
sale of any properties mortgaged and encumbered under our Term Loan Facility are
required to be used to make additional Term Loan Facility payments or to be
reinvested in the business.

long-term debt

During fiscal 2022, we made voluntary prepayments of $202 million on the Term
Loan Facility and borrowed a net $139 million under the ABL Credit Facility. We
entered into a second amendment to the Term Loan Agreement to, among other
things, reduce the applicable reference rate margin by 0.25%, and a third
amendment to the Term Loan Agreement to amend the reference rate thereunder from
LIBOR to Term SOFR. Refer to Note 9-Long-Term Debt in Part II, Item 8 of this
Annual Report for a detailed discussion of the provisions of our credit
facilities and certain long-term debt agreements.

Our Term Loan Agreement and the indenture governing our unsecured 6.75% Senior
Notes due October 15, 2028 (the "Senior Notes") do not include any financial
maintenance covenants. Our ABL Loan Agreement subjects us to a fixed charge
coverage ratio of at least 1.0 to 1.0 calculated at the end of each of our
fiscal quarters on a rolling four quarter basis, if the adjusted aggregate
availability is ever less than the greater of (i) $210 million and (ii) 10% of
the aggregate borrowing base. We have not been subject to the fixed charge
coverage ratio covenant under the ABL Loan Agreement, including through the
filing date of this Annual Report. The Term Loan Agreement, Senior Notes and ABL
Loan Agreement contain certain operational and informational covenants customary
for debt securities of these types that limit our and our restricted
subsidiaries' ability to, among other things, incur debt, declare or pay
dividends or make other distributions to our stockholders, transfer or sell
assets, create liens on our assets, engage in transactions with affiliates, and
merge, consolidate or sell all or substantially all of our and our subsidiaries'
assets on a consolidated basis. We were in compliance with all such covenants
for all periods presented. If we fail to comply with any of these covenants, we
may be in default under the applicable debt agreement, and all amounts due
thereunder may become immediately due and payable.

The following chart outlines our scheduled debt maturities by fiscal year, which
excludes debt prepayments that may be required from Excess Cash Flow (as defined
in the Term Loan Agreement) generated or sales of mortgaged properties in fiscal
2023 or beyond. Based on our Consolidated First Lien Net Leverage Ratio (as
defined in the Term Loan Agreement) at the end of fiscal 2022, no prepayment
from Excess Cash Flow in fiscal 2022 is required to be made in fiscal 2023.

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Contents

                    [[Image Removed: unfi-20220730_g3.jpg]]

Derivatives and hedging activity

We enter into interest rate swap contracts from time to time to mitigate our
exposure to changes in market interest rates as part of our strategy to manage
our debt portfolio to achieve an overall desired position of notional debt
amounts subject to fixed and floating interest rates. Interest rate swap
contracts are entered into for periods consistent with related underlying
exposures and do not constitute positions independent of those exposures.

As discussed above, in the fourth quarter of fiscal 2022, we (i) entered into
the ABL Loan Agreement, (ii) amended the Term Loan Agreement to change the Term
Loan Facility reference rate from LIBOR to Term SOFR and (iii) amended our
outstanding interest rate swap contracts to replace One-Month LIBOR with
One-Month Term SOFR. We did not record any gains or losses upon the conversion
of the reference rates in these interest rate swap contracts, and we believe
these amendments will not have a material impact on our Consolidated Financial
Statements. The cumulative effect of these changes includes the replacement of
LIBOR with Term SOFR as the benchmark interest rate for all remaining credit
facilities. As such, we adopted ASU 2020-04, as discussed in Note 2-Recently
Adopted and Issued Accounting Pronouncements in Part II, Item 8 of this Annual
Report, which will allow us to continue to apply hedge accounting to our
outstanding interest rate swap contracts and terminated or novated interest rate
swap contracts for which the hedged interest rate transactions are still
probable of occurring.

As of July 30, 2022, we had an aggregate of $1,229 million of floating rate
notional debt subject to active interest rate swap contracts, which effectively
hedge the SOFR component of our interest rate payments through pay fixed and
receive floating interest rate swap agreements. These fixed rates range from
1.795% to 2.875%, with maturities between August 2022 and October 2025. The fair
value of these interest rate derivatives represents a total net asset of $2
million and are subject to volatility based on changes in market interest rates.
In fiscal 2021, we paid $17 million to terminate or novate $1,204 million of
interest rate swap contracts over our floating rate notional debt. The
termination payments reflect the amount of accumulated other comprehensive loss
that will continue to be amortized into interest expense over the original
interest rate swap contract terms as long as the hedged interest rate
transactions are still probable of occurring. See Note 8-Derivatives in Part II,
Item 8 and -Interest Rate Risk in Part II, Item 7A of this Annual Report for
additional information.

From time to time, we enter into fixed price fuel supply contracts and currency hedges. From July 30, 2022, we had fixed price fuel contracts and forward foreign exchange contracts outstanding. The gains and losses and the outstanding amount of assets and liabilities arising from these arrangements are insignificant.

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Payments for Capital Expenditures

Our capital expenditures decreased $59 million in fiscal 2022 to $251 million
compared to $310 million for fiscal 2021. Our capital spending for fiscal 2022
and 2021 principally included information technology and supply chain
expenditures, including investment in the new Allentown, Pennsylvania
distribution center. Fiscal 2023 capital spending is expected to be
approximately $350 million and include projects that automate, optimize and
expand our distribution network, and finance our technology platform
investments. We expect to finance fiscal 2023 capital expenditures requirements
with cash generated from operations and borrowings under our ABL Credit
Facility. Future investments may be financed through long-term debt or
borrowings under our ABL Credit Facility and cash from operations.

The following table shows our capital expenditures by type over the past three years.

                    [[Image Removed: unfi-20220730_g4.jpg]]

Cash flow information

Here is a summary of our consolidated statements of cash flows:

                                                                                                               Increase (Decrease)
                                                  2022                2021                2020
(in millions)                                  (52 weeks)          (52 weeks)          (52 weeks)              2022              2021
Net cash provided by operating activities of
continuing operations                         $      331          $      

614 $457 ($283) $157
Net cash used in investing activities from continuing operations

                                (49)               (239)                (28)                 190           (211)
Net cash used in financing activities               (279)               (384)               (453)                 105             69
Net cash flows from discontinued operations            -                   2                  27                   (2)           (25)
Effect of exchange rate on cash                        -                   1                  (1)                  (1)             2
Net increase (decrease) in cash and cash
equivalents                                            3                  (6)                  2                    9             (8)
Cash and cash equivalents, at beginning of
period                                                41                  47                  45                   (6)             2
Cash and cash equivalents at end of period,
including discontinued operations             $       44          $       41          $       47          $         3          $  (6)



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Fiscal 2022 compared to Fiscal 2021

The decrease in Net cash provided by operating activities of continuing
operations was primarily due to higher levels of cash invested in net working
capital due to higher costs of inventory on hand in excess of Accounts payable
increases, and credit extended on continued sales growth, partially offset by
higher amounts of cash provided from higher earnings in fiscal 2022. Our
Accounts payable related to merchandise inventory provide cash flow leverage
against the majority, but not all, of our inventory on hand.

The decrease in Net cash used in investing activities of continuing operations
was primarily due to proceeds received from the sale of the Riverside,
California distribution center in fiscal 2022 discussed above and a reduction in
payments for capital expenditures.

The decrease in Net cash used in financing activities of continuing operations
was primarily due to less cash available from operating activities, net of cash
used in investing activities, to reduce our outstanding debt.

Other obligations and commitments

Our principal contractual obligations and commitments consist of obligations
under our long-term debt, interest on long-term debt, operating and finance
leases, purchase obligations, self-insurance liabilities and multiemployer plan
withdrawals.

Refer to Note 9-Long-Term Debt, Note 11-Leases, Note 13-Benefit Plans, Note
1-Significant Accounting Policies and Note 17-Commitments, Contingencies and
Off-Balance Sheet Arrangements to the Consolidated Financial Statements in Part
II, Item 8 of this Annual Report for more information on the nature and timing
of obligations for debt, leases, benefit plans, self-insurance and purchase
obligations, respectively. The future amount and timing of interest expense
payments are expected to vary with the amount and then prevailing contractual
interest rates over our debt as discussed in Interest Rate Risk in Part II, Item
7A of this Annual Report

Obligations in respect of pensions and other post-employment benefits

We contributed $1 million and $2 million to our defined benefit pension and
other postretirement benefit plans, respectively, in fiscal 2022. As described
in further detail in Note 13-Benefit Plans in Part II, Item 8 of this Annual
Report, in fiscal 2022, we merged the Unified Grocers, Inc. Cash Balance Plan
into the SUPERVALU INC. Retirement Plan. In fiscal 2023, no minimum pension
contributions are required to be made under the SUPERVALU INC. Retirement Plan
under Employee Retirement Income Security Act of 1974, as amended ("ERISA"). An
insignificant amount of contributions are expected to be made to defined benefit
pension plans and postretirement benefit plans in fiscal 2023. We fund our
defined benefit pension plans based on the minimum contribution required under
ERISA, the Pension Protection Act of 2006 and other applicable laws and
additional contributions made at our discretion. We may accelerate contributions
or undertake contributions in excess of the minimum requirements from time to
time subject to the availability of cash in excess of operating and financing
needs or other factors as may be applicable. We assess the relative
attractiveness of the use of cash to accelerate contributions considering such
factors as expected return on assets, discount rates, cost of debt, reducing or
eliminating required Pension Benefit Guaranty Corporation variable rate premiums
or in order to achieve exemption from participant notices of underfunding.

Off-balance sheet multi-employer pension plans

We contribute to various multiemployer pension plans under collective bargaining
agreements, primarily defined benefit pension plans. These multiemployer plans
generally provide retirement benefits to participants based on their service to
contributing employers. The benefits are paid from assets held in trust for that
purpose. Plan trustees typically are responsible for determining the level of
benefits to be provided to participants as well as the investment of the assets
and plan administration. Trustees are appointed in equal number by employers and
unions that are parties to the relevant collective bargaining agreement. Based
on the assessment of the most recent information available from the
multiemployer plans, we believe that most of the plans to which we contribute
are underfunded. We are only one of a number of employers contributing to these
plans and the underfunding is not a direct obligation or liability to us.

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Our contributions can fluctuate from year to year due to store closures,
employer participation within the respective plans and reductions in headcount.
Our contributions to these plans could increase in the near term. However, the
amount of any increase or decrease in contributions will depend on a variety of
factors, including the results of our collective bargaining efforts, investment
returns on the assets held in the plans, actions taken by the trustees who
manage the plans and requirements under the Pension Protection Act of 2006, the
Multiemployer Pension Reform Act and Section 412(e) of the Internal Revenue
Code. Furthermore, if we were to significantly reduce contributions, exit
certain markets or otherwise cease making contributions to these plans, we could
trigger a partial or complete withdrawal that could require us to record a
withdrawal liability obligation and make withdrawal liability payments to the
fund. Expense is recognized in connection with these plans as contributions are
funded, in accordance with GAAP. We made contributions to these plans, and
recognized expense of $45 million, $48 million and $52 million in fiscal 2022,
2021 and 2020, respectively. In fiscal 2023, we expect to contribute
approximately $51 million to multiemployer plans related to continuing
operations, subject to the outcome of collective bargaining and capital market
conditions. We expect required cash payments to fund multiemployer pension plans
from which we have withdrawn to be insignificant in any one fiscal year, which
would exclude any payments that may be agreed to on a lump sum basis to satisfy
existing withdrawal liabilities. Any future withdrawal liability would be
recorded when it is probable that a liability exists and can be reasonably
estimated, in accordance with GAAP. Any triggered withdrawal obligation could
result in a material charge and payment obligations that would be required to be
made over an extended period of time.

We also make contributions to multiemployer health and welfare plans in amounts
set forth in the related collective bargaining agreements. A small minority of
collective bargaining agreements contain reserve requirements that may trigger
unanticipated contributions resulting in increased healthcare expenses. If these
healthcare provisions cannot be renegotiated in a manner that reduces the
prospective healthcare cost as we intend, our Operating expenses could increase
in the future.

Refer to Note 13-Employee benefit plans in Part II, point 8 of this annual report for more information on the plans in which we participate.

Share buybacks

In September 2022, our Board of Directors authorized a new repurchase program
for up to $200 million of our Common stock over a term of four years (the "2022
Repurchase Program"). Upon approval of the 2022 Repurchase Program, our Board
terminated the repurchase program authorized in October 2017, which provided for
the purchase of up to $200 million of our outstanding Common stock (the "2017
Repurchase Program"). We did not repurchase any shares of our Common stock in
fiscal 2022, 2021 or 2020 pursuant to the 2017 Repurchase Program. As of
July 30, 2022, we had $176 million remaining authorized under the 2017
Repurchase Program.

We will manage the pacing of any repurchases in response to market conditions
and other relevant factors, including any limitations on our ability to conduct
repurchases under the terms of our ABL Credit Facility, Term Loan Facility and
Senior Notes. We may implement all or part of the repurchase program pursuant to
a plan or plans meeting the conditions of Rule 10b5-1 under the Exchange Act.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our Consolidated Financial Statements requires us to make
estimates and judgments that affect the reported amounts of assets, liabilities,
revenues and expenses, and the related disclosure of contingent assets and
liabilities. Management believes the following critical accounting policies
reflect our more subjective or complex judgments and estimates used in the
preparation of our Consolidated Financial Statements.
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Contents

Inventories

Inventories are valued at the lower of cost or market. Substantially all of our
inventories consist of finished goods. Inventories are recorded net of vendor
allowances and cash discounts. We evaluate inventory shortages (shrink)
throughout each fiscal year based on actual physical counts in our facilities.
The majority of our inventory is valued under the LIFO method, which allows for
matching of costs and revenues, as the current acquisition cost to is used to
value cost of goods sold as inventory is sold in an inflationary environment. If
the first-in, first-out ("FIFO") method had been used, Inventories, net, would
have been higher by approximately $225 million and $67 million at July 30, 2022
and July 31, 2021, respectively. As of July 30, 2022, approximately $1.9 billion
or 74% of inventory was valued under the LIFO method, before the application of
any LIFO reserve, and primarily included grocery, frozen food and general
merchandise products, with the remaining inventory valued under the first-in,
first-out method and primarily included meat, dairy and deli products. When
holding inventory levels and mix constant, as of July 30, 2022, we estimate a 50
basis point increase in the inflation rate on our ending LIFO-based inventory
would result in an $8 million increase in the LIFO charge on an annualized
basis.

Supplier funds

We receive funds from many of the vendors whose products we buy for resale.
These vendor funds are generally provided to increase the purchasing and
sell-through of the related products. We receive vendor funds for a variety of
merchandising activities: placement of the vendors' products in our advertising;
display of the vendors' products in prominent locations in our stores; support
for the introduction of new products into our stores and distribution centers;
exclusivity rights in certain categories; and compensation for temporary price
reductions offered on products held for sale. We also receive vendor funds for
buying activities such as volume commitment rebates, credits for purchasing
products in advance of their need and cash discounts for the early payment of
merchandise purchases. The majority of our vendor fund contracts have terms of
less than a year, although some of the contracts have terms of longer than one
year.

We recognize vendor funds for merchandising activities as a reduction of Cost of
sales when the related products are sold, unless it has been determined that a
discrete identifiable benefit has been provided to the vendor, in which case the
related amounts are recognized within Net sales and represent less than 0.5% of
total Net sales. Vendor funds that have been earned as a result of completing
the required performance under the terms of the underlying agreements but for
which the product has not yet been sold are recognized as reductions to the
value of on-hand inventory.

The amount and timing of recognition of vendor funds as well as the amount of
vendor funds to be recognized as a reduction to ending inventory requires
management judgment and estimates. Management determines these amounts based on
estimates of current year purchase volume using forecast and historical data,
and a review of average inventory turnover data. These judgments and estimates
impact our reported Gross profit, Operating income and inventory amounts. The
historical estimates have been reliable in the past, and we believe our
methodology will continue to be reliable in the future. Based on previous
experience, we do not expect significant changes in the level of vendor support.
However, if such changes were to occur, Cost of sales and Net sales could
change, depending on the specific vendors involved. If vendor advertising
allowances were substantially reduced or eliminated, we would consider changing
the volume, type and frequency of the advertising, which could increase or
decrease our advertising expense.

Benefit plans

We sponsor pension and other postretirement plans in various forms covering
substantially all employees who meet eligibility requirements. Pension benefits
associated with these plans are generally based on each participant's years of
service, compensation, and age at retirement or termination. Our defined benefit
pension plans and certain supplemental executive retirement plans are closed to
new participants and service crediting.

While we believe the valuation methods used to determine the fair value of plan
assets are appropriate and consistent with other market participants, the use of
different methodologies or assumptions to determine the fair value of certain
financial instruments could result in a different estimate of fair value at the
reporting date.

The determination of our obligation and related expense for Company-sponsored
pension and other postretirement benefits is dependent, in part, on management's
selection of certain actuarial assumptions used in calculating these amounts.
These assumptions include, among other things, the discount rate and the
expected long-term rate of return on plan assets. We measure our defined benefit
pension and other postretirement plan obligations as of the nearest calendar
month end. Refer to Note 13-Benefit Plans in Part II, Item 8 of this Annual
Report for information related to the actuarial assumptions used in determining
pension and postretirement healthcare liabilities and expenses.
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Discount percentages

We review and select the discount rate to be used in connection with our pension
and other postretirement obligations annually. The discount rate reflects the
current rate at which the associated liabilities could be effectively settled at
the end of the year. We set our rate to reflect the yield of a portfolio of high
quality, fixed-income debt instruments that would produce cash flows sufficient
in timing and amount to settle projected future benefits.

We utilize the "full yield curve" approach for determining the interest and
service cost components of net periodic benefit cost for defined benefit pension
and other postretirement benefit plans. Under this method, the discount rate
assumption used in the interest and service cost components of net periodic
benefit cost is built through applying the specific spot rates along the yield
curve used in the determination of the benefit obligation described above, to
the relevant projected future cash flows of our pension and other postretirement
benefit plans. We believe the "full yield curve" approach reflects a greater
correlation between projected benefit cash flows and the corresponding yield
curve spot rates and provides a more precise measurement of interest and service
costs. Each 25-basis point reduction in the discount rate would increase our
projected pension benefit obligation by $44 million, as of July 30, 2022, and
for fiscal 2022 would increase Net periodic benefit income by approximately $4
million.

Expected rate of return on plan assets

Our expected long-term rate of return on plan assets assumption is determined
based on the portfolio's actual and target composition, current market
conditions, forward-looking return and risk assumptions by asset class, and
historical long-term investment performance. The assumed long-term rate of
return on pension assets ranged from 4.25% to 4.50% for fiscal 2022. The 10-year
rolling average annualized return for the SUPERVALU INC. Retirement Plan is
approximately 8.0% based on returns from 2013 to 2022. In accordance with GAAP,
actual results that differ from our assumptions are accumulated and amortized
over future periods and, therefore, affect expense and obligations in future
periods. Each 25-basis point reduction in expected return on plan assets would
decrease Net periodic benefit income for fiscal 2022 by
approximately $5 million.

Amortize gains and losses

We recognize the amortization of net actuarial loss on the SUPERVALU INC.
Retirement Plan over the remaining life expectancy of inactive participants
based on our determination that almost all of the defined benefit pension plan
participants are inactive and the plan is frozen to new participants. For the
purposes of inactive participants, we utilized a 90% threshold established under
our policy.

Multiemployer pension plans

We contribute to various multiemployer pension plans based on obligations
arising from collective bargaining agreements. These multiemployer pension plans
provide retirement benefits to participants based on their service to
contributing employers. The benefits are paid from assets held in trust for that
purpose. Trustees are typically responsible for determining the level of
benefits to be provided to participants as well as such matters as the
investment of the assets and the administration of the plans.

We continue to evaluate and address our potential exposure to underfunded
multiemployer pension plans as it relates to our associates who are or were
beneficiaries of these plans. In the future, we may consider opportunities to
limit the Company's exposure to underfunded multiemployer pension obligations by
moving our active associates in such plans to defined contribution plans, and
withdrawing from the pension plan or continuing to participate in the plans for
prior obligations. In fiscal 2021, we incurred a $63 million charge for
obligations related to withdrawal liabilities for three Retail multiemployer
pension plans where our active associates moved to defined contribution plans
for future benefits. As we continue to work to find solutions to underfunded
multiemployer pension plans, it is possible we could incur withdrawal
liabilities for certain additional multiemployer pension plan obligations in the
future as we actively negotiate new collective bargaining agreements with a
number of our unions in due course.

We continue to evaluate our exposure to underfunded multiemployer pension plans.
Although these liabilities are not a direct obligation or liability of ours,
addressing these uncertainties requires judgment in the timing of expense
recognition when we determine our commitment is probable and estimable.

Refer to Note 13-Benefit Plans in Part II, Item 8 of this Annual Report for more
information relating to our participation in these multiemployer pension plans
and to the actuarial assumptions used in determining pension and other
postretirement liabilities and expenses.

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Self-insurance liabilities

We are primarily self-insured for workers' compensation, general and automobile
liability insurance. It is our policy to record the self-insured portions of our
workers' compensation, general and automobile liabilities based upon actuarial
methods of estimating the future cost of claims and related expenses that have
been reported but not settled, and that have been incurred but not yet reported.
Any projection of losses concerning these liabilities is subject to a
considerable degree of variability. Among the causes of this variability are
unpredictable external factors affecting litigation trends, benefit level
changes and claim settlement patterns. If actual claims incurred are greater
than those anticipated, our reserves may be insufficient and additional costs
could be recorded in our Consolidated Financial Statements. Accruals for
workers' compensation, general and automobile liabilities totaled $98 million
and $103 million as of July 30, 2022 and July 31, 2021, respectively.

Recovery of long-lived assets

We review long-lived assets, including definite-lived intangible assets at least
annually, and on an interim basis if events occur or changes in circumstances
indicate that the carrying value of the assets may not be recoverable. We
evaluate these assets at the asset-group level, which is the lowest level for
which identifiable cash flows are largely independent of the cash flows of other
assets and liabilities. Cash flows expected to be generated by the related
assets are estimated over the assets' useful lives based on updated projections.
When the undiscounted future cash flows are not sufficient to recover an asset's
carrying amount, the fair value is compared to the carrying value to determine
the loss to be recorded.

Estimates of future cash flows and expected sales prices are judgments based on
the Company's experience and knowledge of operations. These estimates project
cash flows several years into the future and include assumptions on variables
such as changes in supply contracts, macroeconomic impacts and market
competition.

We have not identified any material impairment in fiscal 2022 through our quarterly procedures or our annual impairment assessment.

Income taxes

The Company accounts for income taxes under the asset and liability method.
Under the asset and liability method, deferred tax assets and liabilities are
recognized for the future tax consequences attributable to differences between
the financial statement carrying amounts of existing assets and liabilities and
their respective tax bases. Deferred tax assets and liabilities are measured
using enacted tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or settled. The
effect on deferred tax assets and liabilities of a change in tax rates is
recognized within the provision for income tax in the period that includes the
enactment date.

The calculation of the Company's tax liabilities includes addressing
uncertainties in the application of complex tax regulations and is based on the
financial statement recognition and measurement of a tax position taken or
expected to be taken in a tax return. Addressing these uncertainties requires
judgment and estimates; however, actual results could differ, and we may be
exposed to losses or gains. Our effective tax rate in a given financial
statement period could be affected based on favorable or unfavorable tax
settlements. Unfavorable tax settlements will generally require the use of cash
and may result in an increase to our effective tax rate in the period of
resolution. Favorable tax settlements may be recognized as a reduction to our
effective tax rate in the period of resolution.

The Company regularly reviews its deferred tax assets for recoverability to
evaluate whether it is more likely than not that they will be realized. In
making this evaluation, the Company considers the statutory recovery periods for
the assets, along with available sources of future taxable income, including
reversals of existing and future taxable temporary differences, tax planning
strategies, history of taxable income and projections of future income. The
Company gives more significance to objectively verifiable evidence, such as the
existence of deferred tax liabilities that are forecast to generate taxable
income within the relevant carryover periods and a history of earnings. A
valuation allowance is provided when the Company concludes, based on all
available evidence, that it is more likely than not that the deferred tax assets
will not be realized during the applicable recovery period.

Recently released financial accounting standards

For a discussion of recently issued financial accounting standards, refer to
Note 2-Recently Adopted and Issued Accounting Pronouncements in Part II, Item 8
of this Annual Report.

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