UNFI's operations remain hobbled following cyberattack
Dive Brief:
United Natural Foods, Inc. is currently serving customers on only a "limited basis" as it works to recover from an intrusion into its information technology systems that the company discovered last week, CEO Sandy Douglas said during the company's third-quarter earnings call Tuesday morning.UNFI is working with other wholesalers to supply its grocery customers in some cases following the cyberattack, which forced UNFI to shut its network down entirely Friday evening, Douglas said.The grocery wholesaler and retailer also disclosed Tuesday that it has mutually agreed with Key Food to end a long-term arrangement under which UNFI serves as the chief grocery wholesaler to that chain's stores in the Northeast.
Dive Insight:
UNFI's efforts to resume normal operations remain "a work in progress," and the company is working with customers in "various short-term modes," Douglas said.
The company is working with authorities, including the FBI, as it works to bring its systems back online and determine why its information technology defenses failed, he added.
"We use multiple different external benchmarks to assess ourselves and really hold nothing back in this area," Douglas said. "Having said that, we just got penetrated, so we will be continuing to look at every aspect of our defense, every aspect of how our tools are working, and what may be necessary to bolster it going forward, because it's clearly an area that requires a tremendous amount of focus from companies today."
Asked whether customers would be able to break contracts with UNFI because of the cyberattack, Douglas said he was not in a position "to factually answer that question, even if I was inclined to disclose it."
Douglas also said during the call that the company decided to terminate its contract with Key Foods, which it signed in 2021, because the arrangement was unprofitable. UNFI will stop distributing groceries at or around Sept. 20, UNFI said in a regulatory filing.
UNFI will close its distribution center in Allentown, Pennsylvania, in connection with the dissolution of its deal with Key Foods, Douglas added.
"We simply found that the combination of operational factors, post-COVID impacts and the details of that agreement were very difficult, and in collaboration with Key Food, we determined with them that the best possible scenario for everyone, given the facts at hand and the likely scenarios that emerge, was to exit the relationship in the market, and so we did so in an effort to optimize the results for them and for us," Douglas said during the call.
UNFI's sales increased year over year by 7.5%, to $8.1 billion, during Q3. The company posted a net loss of $7 million for the quarter, down from $21 million during the same period a year ago.
Sales for UNFI's retail division, which includes the Shoppers and Cub Foods supermarket chains, rose by less than 1% year over year in Q3, to $573 million.
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