SYY Sysco Corp

By Lisa Beilfuss And Anne Steele 

Sysco Corp. said profit tumbled 12% in its latest quarter as expenses related to its abandoned merger with rival US Foods Inc. eroded earnings despite an uptick in sales.

Sysco, which delivers food and supplies to restaurants, has lately faced rising competition from smaller, specialty distributors and wholesale stores, such as Restaurant Depot. In its fiscal first quarter, Sysco's sales volume rose 2% among smaller, local restaurants--a promising sign as Sysco has been struggling in that area, and those customers are more profitable than national chains.

Following the collapsed merger, from which Sysco walked away because of regulatory hurdles, activist investor Nelson Peltz through his hedge fund Trian Fund Management LP disclosed a 7% stake in the company in August.

Trian has argued that Sysco hasn't lived up to its potential and has pushed for changes that could improve operating results. In August, Sysco agreed to add Mr. Peltz and Josh Frank of Trian to its board.

In the latest quarter, Sysco earned $244.4 million, or 41 cents a share, down from $278.8 million or 47 cents, a year earlier. Excluding certain items, adjusted earnings were flat at 52 cents.

Revenue edged up 0.9% to $12.56 billion.

Analysts had projected 52 cents in adjusted earnings per share on $12.58 billion in revenue, according to Thomson Reuters.

Sysco posted $126.9 million of interest expense in the latest quarter, compared with $30.9 million a year earlier, and the impact of US Foods financing costs totaled $94.8 million in the quarter, compared with $3.7 million in the year-earlier period.

The company also took a $9.8 million hit in the latest quarter on planning and integration costs associated with the failed merger, compared with $40.5 million a year ago.

Shares in the company, which have risen 15% over the past three months, were inactive premarket.

Annie Gasparro contributed to this article

Write to Lisa Beilfuss at lisa.beilfuss@wsj.com and Anne Steele at Anne.Steele@wsj.com

(END) Dow Jones Newswires

November 02, 2015 13:03 ET (18:03 GMT)

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