Sysco Reports First Quarter Fiscal 2019 Results

Sysco Corporation announced financial results for its first quarter fiscal 2019. While the foodservice distributor reported solid top-line numbers—the company also remarked the persistently costly effects of increased transportation and warehousing costs on the company’s finances.

Highlights from the 13-week period ending September 29, 2018 included:

• Sales increased 3.9% to $15.2 billion
• Gross profit increased 3.9% to $2.9 billion; gross margin increased 2 basis points
• Operating income increased 1.4% to $628.1 million; adjusted operating income increased 5.1% to $691.7 million
• EPS increased $0.12 to $0.81; adjusted EPS increased $0.17 to $0.91

“Our top-line results for the first quarter were solid, particularly in our U.S. Foodservice segment,” said Tom Bené, President and CEO. “We continue to see expense challenges in the warehouse and transportation areas of our supply chain, which we anticipate will persist. We remain focused on the execution of our strategic priorities, which we believe will serve as the roadmap for additional growth and value creation.”

The company noted shipping and transportation challenges contributed to nearly static gross profits, a gross margin decrease of 11 basis points, and increased operating expenses of $10.4 million, up 1.9% over last year. According to the Houston Chronicle, Sysco’s failure to hit financial targets sent stocks sliding more that 7% in pre-market trading despite solid top-line results,.

To read more about Sysco's Q1 2019, see the company's earnings release in its entirety here.

Will supply chain issues continue to hamper Sysco and other foodservice providers? Deli Market News will continue to report.