Retail sales in the U.S. rose slightly in June as inflation slowed and wealthier households kept up their spending on discretionary experiences such as travel and dining out, helping food distributors such as Sysco revive sales.
Shares of the company, however, fell about 2% in early trading after its quarterly gross margin decreased 17 basis points to 18.7%, as pricier fuel following the U.S.-Israeli war on Iran increased the cost of food and transportation.
Sysco, which sources fresh food produce for restaurants, had come under scrutiny last month after a multistate outbreak of the parasitic disease cyclosporiasis linked by U.S. health agencies to contaminated iceberg lettuce from California-based supplier Taylor Farms.
Sysco said on July 16 that it had halted the sale and distribution of Taylor Farms-processed iceberg lettuce from Mexico, after learning that it was potentially linked to the outbreak. The products were recalled the following day at the direction of Taylor Farms.
The company expects fiscal year 2027 sales to grow 6% to 7%, compared with analysts' estimates of 5.12%, according to data compiled by LSEG.
It also sees adjusted earnings per share growth for the year between 9% and 11%, compared with estimates of 7.52%.
The food distributor also announced fresh cost-cutting measures, which it expects to deliver $100 million in net savings in fiscal year 2027 when combined with previous initiatives.
Sales rose 4.7% to about $22.12 billion for the quarter ended June 27, compared with analysts' estimate of a 3.8% rise to $21.94 billion.
Sysco reported quarterly adjusted profit per share of $1.53, beating estimates of $1.51.
