Sysco Q1 Earnings: Sales Miss Estimates, Full-Year EPS Outlook Unchanged

Sysco Corp. (NYSE:SYY) shares are trading lower in Tuesday premarket trading after the company reported fiscal first-quarter 2027 results, with adjusted earnings per share matching analyst estimates while sales missed expectations. Sysco also reaffirmed its full-year adjusted EPS growth outlook but lowered its sales growth expectations to the bottom end of its guidance range.

The foodservice distributor reported adjusted earnings per share (EPS) of $1.19, matching analyst estimates, while sales of $21.74 billion missed the $22.02 billion estimate.

The company reaffirmed its fiscal 2027 adjusted EPS growth guidance of 9% to 11% and said it now expects full-year sales growth at the lower end of its 6% to 7% range, citing lower industry inflation.

Sales and Volume

Sales rose 2.8% from a year earlier. In U.S. Foodservice, total case volume increased 2.6% and local case volume increased 2.7%. Gross profit rose 3.8% to $4.1 billion. Gross margin rose 18 basis points to 18.6%, and product cost inflation was 0.3%.

Adjusted operating income rose 3.2% to $927 million. International adjusted operating income rose 12.2% to $165 million.

Guidance and Management Adjustments

Sysco affirmed fiscal 2027 adjusted EPS guidance of $5.02 to $5.12, against a $5.05 estimate. It narrowed its sales guidance to $89.63 billion, the low end of its prior $89.63 billion to $90.47 billion range, against an $89.88 billion estimate. Local volume growth assumptions stay at about 2.5%. The outlook includes about $100 million of AI-enabled net cost savings, weighted toward the second half.

Sysco also made interim CFO Brandon Sewell its permanent CFO, effective Sunday.

"We remain confident in delivering on our adjusted EPS growth guidance of 9%-11%, reflecting unchanged local volume growth assumptions of approximately 2.5%, while full year sales growth is now expected to be at the lower end of our 6%-7% range, reflecting a lower inflation environment for the industry," Sewell said.

Cash Flow and Jetro

Free cash flow was $230 million, compared with negative $50 million a year earlier. Sysco returned $264 million to shareholders through dividends. The quarter includes a $234 million gain on rate locks tied to financing for the Jetro Restaurant Depot acquisition.

Cash and cash equivalents stood at $3.17 billion at the end of the period.

CEO Kevin Hourican said the quarter came "despite continued softness in restaurant foot traffic, higher than expected fuel costs, and lower than expected U.S. food cost inflation." He listed the company’s priorities as meeting customer and financial commitments, improving operating margins through AI-powered business transformation, and preparing for the expected closing of the Jetro Restaurant Depot deal.

SYY Stock Price Activity: Sysco shares are trading lower by 5.77% at $77.02 during premarket trading on Tuesday, according to Benzinga Pro data.

Image via Shutterstock