Sysco has reported a 1.1% increase in sales for the third quarter (Q3) of fiscal year (FY) 2025, reaching $19.6bn, up from $19.3bn in the same period of 2024.
Despite this growth, the company faced a decrease in gross profit by 0.8% to $3.6bn, with gross margin declining 35 basis points to 18.3%.
Operating expenses saw a 0.5% rise, attributed to investments in business and sales headcount, coupled with higher supply chain costs.
However, these were partially mitigated by a reduction in annual bonus incentive compensation, leading to a marginal 0.1% decrease in adjusted operating expenses.
Operating income fell by 5.7% to $681m, and adjusted operating income dropped 3.3% to $773m from $779m in the previous year.
Product cost inflation was noted at 2.1% across Sysco’s enterprise, predominantly in dairy and meat products.
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By GlobalDataThe decline in Q3 gross profit was primarily due to lower volumes and a change in product mix.
EBITDA decreased by 2.5% to $910m from $933m in the same quarter of 2024, and adjusted EBITDA saw a 0.8% decrease to $969m from $977m.
Diluted earnings per share (EPS) also experienced a downturn of 3.5% to $0.82, compared to $0.85 in the same period of 2024, although adjusted EPS remained consistent at $0.96.
Sysco’s updated guidance for FY25 anticipates approximately 3% sales growth and at least a 1% increase in adjusted EPS.
The US foodservice operations segment was affected by lower volumes due to negative industry foot traffic and strategic business investments, which were slightly offset by reduced annual bonus incentive compensation.
Sales in this segment for the third quarter rose by 0.7% to $13.8bn.
In addition, the total case volume within the segment decreased by 2.0%, with local case volume experiencing a 3.5% decline.
Gross profit in this segment fell by 1.9% to $2.6bn, and gross margin reduced by 50 basis points to 18.9%.
Sysco’s chair of the board and CEO Kevin Hourican said: “Sysco’s Q3 results were negatively impacted by multiple factors: California wildfires, significantly adverse weather, and more recently, weakening consumer confidence.
“Each of these variables had a negative impact on foot traffic to restaurants that led the quarter, in total, to fall short of our internal expectations. Countering these headwinds as much as possible, Sysco is making progress on multiple important growth and profit improvement activities.
“Our local case volume has seen an improved exit velocity in March and I fully anticipate further progress on initiatives as we progress through Q4 and into fiscal 2026.”
