Key Highlights

  • Adjusted EPS of USD 1.19 matched the consensus estimate, up 3.5%, while GAAP diluted EPS rose 10.1% to USD 1.09.
  • Sales of USD 21.74 billion rose 2.8% but fell short of the consensus estimate of USD 22.02 billion.
  • U.S. Foodservice local case Volume grew 2.7%, and gross Margin widened 18 basis points to 18.6% across the company.
  • Adjusted EPS growth guidance of 9% to 11% held, with sales growth at the low end of 6% to 7%.

Sysco Corporation (NYSE:SYY) reported first quarter fiscal 2027 sales of USD 21.74 billion, up 2.8% from USD 21.15 billion a year earlier and below the consensus estimate of USD 22.02 billion. Adjusted EPS of USD 1.19 matched the consensus estimate of USD 1.19 and compared with USD 1.15 a year earlier, a gain of 3.5%. GAAP diluted EPS rose 10.1% to USD 1.09 from USD 0.99, and net Earnings increased 10.5% to USD 526 million.

Chair and Chief Executive Officer Kevin Hourican described the start of the year as strong, pointing to volume growth, wider gross margins and tight expense control, and said these offset soft restaurant foot traffic, higher fuel costs and lower food cost Inflation than the company had anticipated.

Gross Margin Gains Met Higher Acquisition Costs

Gross profit rose 3.8% to USD 4.05 billion, and gross margin widened 18 basis points to 18.6%. The company attributed the gain to local volume growth, Tariff related benefits, strategic sourcing efficiencies and higher Sysco Brand penetration. Product cost inflation was 0.3% across the enterprise, mostly in meat. Operating expenses grew 7.5%, driven by acquisition costs, volume and Investment in faster growing areas, which pulled GAAP Operating Income down 10.4% to USD 717 million. Adjusted operating income rose 3.2% to USD 927 million, holding adjusted Operating Margin at 4.3%.

U.S. Foodservice sales rose 2.4% to USD 15.1 billion on total case growth of 2.6%, and adjusted operating income there rose 2.7% to USD 941 million. International Foodservice sales rose 5.1% to USD 4.2 billion, or 6.0% in constant currency, and its adjusted operating income climbed 12.2% to USD 165 million. Interest expense increased to USD 261 million from USD 172 million.

Guidance Held While the Sales Growth Range Narrows

The company reiterated fiscal 2027 adjusted EPS growth guidance of 9% to 11% and local volume growth of approximately 2.5%. Sales growth is now guided to the lower end of the 6% to 7% range, which management tied to a lower inflation environment across the industry. The guidance includes USD 100 million of savings from AI enabled cost initiatives, with benefits accelerating in the second half.

Management named three priorities for the year: Customer Service and core financial commitments, margin improvement through AI powered transformation, and preparation for the closing of the Jetro Restaurant Depot transaction. Separately, the company confirmed that its interim chief financial officer, in the role since March 2026, became chief financial officer effective November 1, 2026.

Cash, Leverage and Volume Against Prior Periods

Operating cash flow was USD 278 million against USD 86 million in the prior year quarter, and free cash flow was USD 230 million against negative USD 50 million. Cash stood at USD 3.17 billion against USD 1.79 billion at the end of fiscal 2026, while total Debt of USD 13.82 billion left net debt at USD 10.65 billion, or 2.4 times adjusted EBITDA. Local case volume growth of 2.7% compares with negative 0.2% a year earlier, and total U.S. case growth of 2.6% compares with 0.1%. Dividends returned USD 264 million, and capital expenditures net of disposals were USD 48 million.