Sysco Misses Q3 Targets As Wildfires, Declining Foot Traffic Weigh On Results

Sysco Corp SYY reported third-quarter FY25 sales growth of 1.1% year-on-year to $19.60 billion, missing the analyst consensus estimate of $20.05 billion.

U.S. Foodservice operations sales rose 0.7% Y/Y, and International Foodservice sales slipped 1.1%.

Gross profit decreased 0.8% Y/Y to $3.6 billion, and the gross margin contracted 35 basis points to 18.3%.

The operating margin contracted 26 basis points to 3.5%, and operating income for the quarter declined 5.7% to $681 million. Non-GAAP operating margin declined 18 basis points to 3.9%.

Adjusted EBITDA decreased 0.8% Y/Y to $969 million in the quarter. Adjusted EPS of $0.96 missed the consensus estimate of $1.03.

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Sysco held $1.52 billion in cash and equivalents as of March 29. Operating cash flow for nine months totaled $1.3 billion, with a free cash flow of $954 million.

During the nine months, the company returned approximately $1.5 billion to shareholders through $700 million in share repurchases and $752 million in dividends.

"Sysco’s Q3 results were negatively impacted by multiple factors: California wildfires, significantly adverse weather, and more recently, weakening consumer confidence," said Kevin Hourican, Sysco's CEO.

“Each of these variables had a negative impact on foot traffic to restaurants which led the quarter, in total, to fall short of our internal expectations.”

Price Action: SYY shares traded lower by 0.18% at $70.24 on Tuesday.

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