The Investor
03 Nov 2026, 14:59
Sysco Falls 4.3% as Softer Sales Outlook and Cost Pressures Offset Solid Q1 Results
Sysco (NYSE: SYY) shares fell about 4.3% after the company reported modest first-quarter fiscal 2027 growth but indicated that full-year sales are now expected at the lower end of its previous range.
Quarterly sales increased 2.8% to $21.7 billion, while U.S. Foodservice volume rose 2.6% and local volume increased 2.7%. Gross profit grew 3.8% to $4.1 billion, with gross margin expanding 18 basis points to 18.6%.
Adjusted operating income increased 3.2% to $927 million, adjusted net earnings rose 4.2% to $574 million and adjusted EPS increased 3.5% to $1.19. Adjusted EBITDA rose 5.4% to $1.1 billion.
However, GAAP operating income fell 10.4% to $717 million as acquisition-related costs tied to the planned Jetro Restaurant Depot transaction weighed on results. Operating expenses increased 7.5%, reflecting acquisition costs, higher volumes and investment in growth initiatives.
Management reiterated its fiscal 2027 adjusted EPS growth target of 9%-11% and maintained its local volume growth assumption of about 2.5%. But full-year sales growth is now expected at the lower end of the previous 6%-7% range because food-cost inflation has been weaker than anticipated.
The operating environment also remains uneven. Sysco cited continued softness in restaurant traffic, higher-than-expected fuel costs and lower food inflation as headwinds, although management expects AI-driven efficiency initiatives to deliver roughly $100 million of savings during the year.
The 4.3% decline appears to reflect disappointment with the softer sales outlook and relatively modest adjusted earnings growth. While volumes and margins improved, investors appear to be focusing on slower nominal revenue growth, elevated costs and the limited near-term earnings acceleration implied by the first-quarter results.
Sysco (NYSE: SYY) shares fell about 4.3% after the company reported modest first-quarter fiscal 2027 growth but indicated that full-year sales are now expected at the lower end of its previous range.
Quarterly sales increased 2.8% to $21.7 billion, while U.S. Foodservice volume rose 2.6% and local volume increased 2.7%. Gross profit grew 3.8% to $4.1 billion, with gross margin expanding 18 basis points to 18.6%.
Adjusted operating income increased 3.2% to $927 million, adjusted net earnings rose 4.2% to $574 million and adjusted EPS increased 3.5% to $1.19. Adjusted EBITDA rose 5.4% to $1.1 billion.
However, GAAP operating income fell 10.4% to $717 million as acquisition-related costs tied to the planned Jetro Restaurant Depot transaction weighed on results. Operating expenses increased 7.5%, reflecting acquisition costs, higher volumes and investment in growth initiatives.
Management reiterated its fiscal 2027 adjusted EPS growth target of 9%-11% and maintained its local volume growth assumption of about 2.5%. But full-year sales growth is now expected at the lower end of the previous 6%-7% range because food-cost inflation has been weaker than anticipated.
The operating environment also remains uneven. Sysco cited continued softness in restaurant traffic, higher-than-expected fuel costs and lower food inflation as headwinds, although management expects AI-driven efficiency initiatives to deliver roughly $100 million of savings during the year.
The 4.3% decline appears to reflect disappointment with the softer sales outlook and relatively modest adjusted earnings growth. While volumes and margins improved, investors appear to be focusing on slower nominal revenue growth, elevated costs and the limited near-term earnings acceleration implied by the first-quarter results.
