Hurt by higher prices for meats, dairy and seafood, Sysco (NYSE:SYY) revealed on Monday a weaker second-quarter profit, sending its shares down more than 6% intraday.
The Houston-based company posted net earnings of $258 million, or 44 cents a share, compared with $268 million, or 45 cents a share, in the same quarter last year, just below average analyst estimates polled by Thomson Reuters of 47 cents.
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Revenue for the distributor of food and related products to the food-service industry was $9.38 billion, up 5.8% from $8.9 billion a year ago, missing the Street’s view of $9.47 billion.
Sysco CEO Bill DeLaney attributed the weaker results to the unfavorable impact of certain market conditions and operational challenges, particularly higher food costs.
“Accelerating and significant food cost inflation negatively impacted our customers' purchasing budgets, contributed to increased gross margin pressure and meaningfully increased our selling expense,” he said. “In addition, higher year over year pension and fuel costs also adversely impacted our ability to grow operating earnings over the prior year.”
Food cost inflation, the estimated change in Sysco’s product costs, was 4.5%, driven by double-digit levels of inflation in its meat, dairy and seafood categories.