Food distributor Sysco forecasts strong annual sales, profit on resilient demand

Sysco, which sources fresh food produce for restaurants, came under scrutiny last month after a multistate outbreak of the parasitic disease cyclosporiasis linked by U.S. health agencies to contaminated iceberg lettuce from California-based supplier Taylor Farms.

Sysco said on July 16 that it had halted the sale and distribution of Taylor Farms-processed iceberg lettuce from Mexico, after learning that it was potentially linked to the outbreak. The products were recalled the following day at the direction of Taylor Farms.

The food distributor on Tuesday also announced fresh cost-cutting measures, which it expects to deliver $100 million in net savings in fiscal year 2027 when combined with previous initiatives.

Sysco expects fiscal year 2027 sales to grow in the range of 6% to 7%, compared with analysts' estimates of 5.12%, according to data compiled by LSEG.

It also sees adjusted earnings per share growth for the year between 9% and 11%, compared with estimates of 7.52%.

The company's sales rose 4.7% to about $22.12 billion for the quarter ended June 27, compared with analysts' estimate of a 3.8% rise to $21.94 billion.

It reported adjusted profit of $1.53 per share in the quarter, beating estimates of $1.51 per share.

However, Sysco's gross margin decreased 17 basis points to 18.7% owing to product cost inflation, primarily in the meat and fresh produce categories.

Aug. 4 (Reuters) - Sysco SYY.N on Tuesday forecast strong annual results after beating quarterly sales and profit estimates, helped by improving orders from local and international customers despite macroeconomic uncertainty and an outbreak of cyclosporiasis in the U.S.

Retail sales in the U.S. rose slightly in June as inflation slowed and wealthier households kept up their spending on discretionary experiences such as travel and dining out, helping food distributors such as Sysco revive sales.