Skip to main content

Sysco Misses Expectations

Shares of Sysco fall several points as higher quarterly profits miss Wall Street's expectations by a penny.



) --


(SYY) - Get Sysco Corporation 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

(FXG) - Get First Trust Consumer Staples AlphaDEX Fund Report

, 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

Scroll to Continue

TheStreet Recommends

(PSL) - Get Invesco DWA Consumer Staples Momentum ETF Report

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.


>>Altria Group to Outperform in 2010, Investors Say

>>Castle Brands Hit by ForEx Hangover

>>Fast Food Stocks Deliver Mixed Bag

>>Anheuser-Busch Scores With World Cup

>>See our new stock quote page.

Follow Miriam Marcus Reimer on


and become a fan of TheStreet on


Get more stock ideas and investing advice on our sister site,

Disclosure: TheStreet's editorial policy prohibits staff editors and reporters from holding positions in any individual stocks.