Foodservice

Sysco takes a big Q4 sales and earnings hit from pandemic

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August 11, 2020

Sysco Corp.'s sales fell 42.8% to $8.9 billion for the fourth quarter ending June 27, driving down operating income by 173.8% ($531.6 million), according to a press release.

Earnings per share decreased $2.78 to $0.42 cents, while adjusted earnings per share decreased $1.54 to $2.01, according to the earnings report.

The company's loss closely matched analyst expectations, according to a Nasdaq report.

The company's common stock reached $60.53 on Aug. 10, a one-month high, before falling to $58.71 today.

Operating income was $40.6 million, a decrease of $786 million, or 95.1%, compared to the same period last year. Adjusted operating income was $164.9 million, a decrease of $658.7 million, or 80.0%, compared to the same period last year.

"While our fourth quarter and fiscal 2020 results were significantly impacted by the COVID-19 pandemic, we quickly responded by strengthening our balance sheet, adding new and different types of customers, and strategically committing resources to plan for the eventual return of demand," Kevin Hourican, Sysco's president and CEO, said in a prepared statement. "Our quarterly results came in notably better than we anticipated. More importantly, we are confident that the transformational steps we are taking better position Sysco to meet the evolving needs of our customers and the marketplace as we emerge from this crisis."

U.S. foodservice sales for the fourth quarter were $6.1 billion, a decrease of 42.8% compared to the same period last year.

Local case volume within U.S. broadline operations decreased 38.7% for the fourth quarter, of which a decrease of 39.4% was organic, while total case volume within U.S. broadline operations decreased 41.5%, of which a decrease of 41.9% was organic.

Gross profit for the U.S. decreased 45.7% to $1.2 billion, and gross margin decreased 102 basis points to 19.1%, compared to the same period last year. Food cost inflation was relatively flat in

U.S. broadline as measured by the estimated change in Sysco's product costs, as a result of inflationary pressure primarily in the meat category, specifically beef, offset by deflation in the poultry and frozen categories.

Operating expenses decreased $196.3 million for the U.S., or 14.9%, compared to the same period last year. Adjusted operating expenses decreased $323.6 million, or 24.4%, compared to the same period last year.

Sales for international foodservice operations the fourth quarter were $1.4 billion, a decrease of 53.4% compared to the same period last year.

On a constant currency basis, sales for the fourth quarter were $1.4 billion, a decrease of 51.9% compared to the same period last year. Foreign exchange rates negatively affected International Foodservice Operations sales by 1.5% and total Sysco sales by 0.3% during the quarter.

For an update on how the coronavirus pandemic has affected convenience services, click here.