(SYY - Get Report)
quarterly performance was boosted by higher food inflation costs, but improved profits missed expectations and investors bid the distributor's shares lower.
Sysco said net quarterly profits grew 7.1% to $337.8 million, or 57 cents per share, from $315.3 million, or 53 cents per share, in the year-earlier period. But analysts had expected the food distributor to earn $345.2 million, or 58 cents per shares.
Investors voiced their disappointment, bidding Sysco shares lower by 2.3%, to close at $29.28. The
First Trust Consumer Staples AlphaDEX
, and the
PowerShares Value Line Industry
, exchange-traded funds with holdings in Sysco, fell 0.3% and less than 0.1%, respectively. The
Dynamic Consumer Staples Sector Portfolio
edged 0.4% higher.
Chief Executive Bill DeLaney said Sysco has "seen no consistent pattern of improvement on a week-to-week basis" but said he was "encouraged by the fact that we have now experienced positive volume comparisons for the past several months."
Sysco's revenue surged 13.9% in the fourteen weeks ended July 3 to $10.35 billion, easily topping expectations for top-line sales of $9.95 billion. Strong revenue growth was attributed to increased volume trends and the impact of food cost inflation.
Food cost inflation for Sysco rose 2.2% in the quarter, mainly from increased prices for dairy, meat and produce, further padding top-line figures. It was the first time in a year food inflation costs rose, the company said. Sysco distributes food products and services to a range of facilities like restaurants, hospitals, hotels, schools and colleges. Quarterly sales also got a boost of 1.3% from favorable foreign exchange rates in the quarter.
The company said EPS included a 4 cent per share favorable impact from a 14th week of operations in the quarter, compared with 13 weeks in the fourth quarter last year, as well as a 2 cent per share negative impact from corporate-owned life insurance.
"While industry conditions are more favorable than they were a year ago, our marketplace remains highly competitive," DeLaney said.
-- Reported by Miriam Marcus Reimer from New York.
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