Sysco Exceeds Quarterly Sales Expectations Amid Steady Demand but Falls Short on Profit
Source: DairyNews.today
Sysco Corporation, the major food distribution company, reported first-quarter revenue exceeding analysts’ expectations on Tuesday, bolstered by strong demand for specialty seafood and fresh-cut meat products, according to Reuters. However, the company’s earnings per share (EPS) fell short of market projections.
The Texas-based distributor recorded a 4.4% year-over-year sales increase, reaching $20.48 billion for the quarter ending on September 28, slightly surpassing the $20.46 billion forecast compiled by LSEG analysts. Sysco’s growth in sales offers an encouraging signal for the food distribution sector, particularly as broader U.S. restaurants grapple with lower consumer traffic, influenced by rising household expenses and higher menu prices.
Sysco has been actively addressing these market challenges by supporting its client base, which spans educational, healthcare, and recreational institutions, as well as local restaurants, with low-cost menu alternatives to attract cost-sensitive diners. These initiatives have positioned Sysco favorably against other industry players, such as Hormel Foods and Conagra Brands.
Despite the revenue growth, Sysco continues to encounter pressure from persistently high prices for both packaged and fresh food products. This is occurring even as broader supply chain issues and input costs begin to recede. Gross profit margins took a hit, slipping 27 basis points to 18.3% for the quarter, signaling ongoing cost pressures.
Sysco’s CEO, Kevin Hourican, expressed optimism for the company's financial trajectory, noting, "We remain on track to accelerate local volume growth and margins in the second half of the year, with an improving pipeline."
Adjusted earnings for the quarter stood at $1.09 per share, falling below the anticipated $1.13 per share, indicating the ongoing impact of elevated food costs on profitability. Nonetheless, Sysco reaffirmed its 2025 outlook, projecting full-year sales growth between 4% and 5% and adjusted EPS growth of 6% to 7%, underscoring confidence in the company’s long-term strategy.
Sysco has been actively addressing these market challenges by supporting its client base, which spans educational, healthcare, and recreational institutions, as well as local restaurants, with low-cost menu alternatives to attract cost-sensitive diners. These initiatives have positioned Sysco favorably against other industry players, such as Hormel Foods and Conagra Brands.
Despite the revenue growth, Sysco continues to encounter pressure from persistently high prices for both packaged and fresh food products. This is occurring even as broader supply chain issues and input costs begin to recede. Gross profit margins took a hit, slipping 27 basis points to 18.3% for the quarter, signaling ongoing cost pressures.
Sysco’s CEO, Kevin Hourican, expressed optimism for the company's financial trajectory, noting, "We remain on track to accelerate local volume growth and margins in the second half of the year, with an improving pipeline."
Adjusted earnings for the quarter stood at $1.09 per share, falling below the anticipated $1.13 per share, indicating the ongoing impact of elevated food costs on profitability. Nonetheless, Sysco reaffirmed its 2025 outlook, projecting full-year sales growth between 4% and 5% and adjusted EPS growth of 6% to 7%, underscoring confidence in the company’s long-term strategy.
