By Tess Stynes
Sysco Corp.'s (SYY) fiscal first-quarter earnings edged down
0.4% as lower margins and higher operating costs offset the
food-service distributor's revenue growth.
Soft consumer spending at restaurants and higher restructuring
costs have weighed on the company's performance in recent quarters.
To operate more profitably as consumers remain cautious about
spending for discretionary items such as eating out at restaurants,
Sysco has been implementing a new technology system to improve its
efficiency. However, the transition has been in the works for
several years, and it is taking longer than expected to realize the
benefits.
The company's food-cost inflation continued to moderate in the
latest quarter, up 2.1% compared with an increase of 2.2% reported
a year earlier. Cost inflation in the latest period was mostly
driven by higher prices in the poultry category.
For the period ended Sept. 28, Sysco reported a profit of $285.6
million, or 48 cents a share, down from $286.6 million, or 49 cents
a share, a year earlier. Excluding restructuring-related expenses
and other items, adjusted earnings were lower at 56 cents from 58
cents. Revenue increased 5.7% to $11.71 billion.
Analysts polled by Thomson Reuters recently expected per-share
earnings of 48 cents and revenue of $11.62 billion.
Gross margin fell to 17.6% from 18.3%. Operating expenses
increased 2.3%.
Case volume for the company's Broadline and SYGMA operations
combined grew 4.1%, and excluding acquisitions case volume improved
1.8%.
Shares were up 2.6% at $33.42 in recent premarket trading.
Through Friday's close, the stock is up 2.8% this year.
Write to Tess Stynes at tess.stynes@wsj.com
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