Food distributor Sysco misses Q2 sales estimates on slowing demand By Reuters

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© Reuters. A Sysco sign is shown outside one of their distribution centers in Poway, California, U.S. February 6, 2017. REUTERS/Mike Blake

(Reuters) – Sysco (NYSE:) missed Wall Street expectations for its second-quarter sales on Tuesday, as demand for custom meat cuts and high-quality seafood petered out in the face of still-high inflation.

With customers cutting back on dining out, margins of consumer staple companies like Sysco and peers Hormel Foods (NYSE:), Conagra Brands (NYSE:), and Lamb Weston have come under pressure.

Sysco’s U.S. foodservice segment – which serves enterprise customers like schools and restaurants – saw volume grow by 3.4% in the second quarter compared to a 5.2% rise a year ago.

The company’s quarterly net sales rose 3.7% to $19.29 billion for the quarter ended Dec. 30, compared with analysts’ average estimate of $19.32 billion, according to LSEG data.

Unlike its peers, Sysco’s strategy to limit price hikes and improvements in supply chain productivity helped the company shield its margins from rising product costs in frozen, canned and dry food categories.

The company’s quarterly gross profit margin rose 21 basis points to 18.2%.

On an adjusted basis, the company posted a profit of 89 cents per share in the quarter, marginally ahead of LSEG estimates of 88 cents.

Shares of the Texas-based company seesawed in pre-market trade, rising marginally after having fallen 1.5% earlier.



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