Sysco (NYSE:SYY) revealed a worse-than-expected 22% decline in fiscal third-quarter profit on Monday as the dampened economy caused some consumers to pull back on discretionary spending.
The Houston, Texas-based food distributor, whose clients are mostly restaurants and universities, blamed the disappointing results on the weak fiscal environment and difficult market that it says have triggered a flight to financial safety among consumers.
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Restaurants have had a roller coaster ride throughout the last five years, with sales sometimes matching seasonal trends and swinging drastically below expectations other times. Higher expenses further squeezed Sysco’s margins, growing 9.8% amid food cost inflation of 2.4%.
In its most recent quarter, the company posted net earnings of $201 million, or 34 cents a share, compared with a year-earlier profit of $259.6 million, or 44 cents a share.
Excluding one-time items, Sysco said it earned 40 cents a share, below average analyst estimates of 43 cents a share in a Thomson Reuters poll.
"Our financial results reflect in part the difficult market conditions we experienced in our underlying business during the third quarter,” Sysco CEO Bill DeLaney said in a statement. “Sales and operating earnings were negatively impacted by economic and weather related headwinds which dampened consumers' willingness to spend on meals away from home."
Revenue for the three-month period ended March 30 climbed 4% to $10.9 billion from $10.5 billion a year ago, but missed the Street’s view of $11.1 billion.
Shares of Sysco fell 1% in recent trade to $34.30. The company gave no update to its current-quarter or fiscal 2013 outlook.