Credit where due, United Natural Foods (UNFI) has managed the sudden and dramatic shifts in its business caused by COVID-19 pretty well, and the unexpected cash flow has helped fund debt reduction and future automation investments, even as the pandemic has delayed the eventual sale of the retail operations.
The fact remains that distribution, particularly food distribution, is a brutally competitive business with razor-thin margins. That should keep potential new market entrants at bay, but the risk of losing Amazon's (AMZN) business still hangs over the operations, and a lot of the company's addressed market is under significant pressure. While I can see upside in UNFI's share price from here, I look at this as a difficult opportunity where it's hard to see adequate returns for the risks.
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United Natural Foods On Better Footing, But Still In A Brutal Business
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