(Sysco earnings article updated with comments from CEO DeLaney.)
(SYY - Get Report) beat top-line expectations but quarterly earnings come up short on a decline in gross profit margin and higher pension costs.
Sysco said early Monday its 2011 fiscal first quarter revenue increased 7.4% to $9.8 billion, topping Wall Street's expectations.
Quarterly profits slid 8.3% to $299.1 million, or 51 cents per share, shy of analysts' consensus call for earnings of $302 million.
Investors voiced their disapproval, bidding Sysco shares 2.7% lower to close at $29.23 Monday.
CEO Bill DeLaney called Sysco's sales growth "encouraging," and said its bottom-line miss was "largely due to a decline in gross profit margin and higher pension costs."
"Case volume was higher across all regions in our Broadline and SYGMA segments and the year-over-year increase represented the strongest improvement since the second quarter of fiscal 2007," DeLaney said on a
conference call with investors
"While the pace of the macroeconomic recovery remains sluggish and restaurant traffic patterns continue to be under pressure, recent data suggests the industry is slowly recovering," he added.
The distributor of food and foodservice products attributed its revenue growth to the impact of food cost inflation and strong case volume growth. Food cost inflation was 3.3%, Sysco said, driven by nearly 10% inflation in the combined categories of meat, dairy and seafood.
"While we typically are able to pass through modest levels of price inflation on a timely basis, it is more difficult in the short-term to pass through double digit price increases to our customers without negatively impacting their business," DeLaney said.