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Investing.com -- Sysco Corporation (NYSE:SYY) reported first-quarter fiscal 2026 earnings that slightly beat analyst expectations, but shares tumbled 5.2%.
The food distribution giant posted adjusted earnings per share of $1.15, exceeding the analyst estimate of $1.12, while revenue rose 3.2% YoY to $21.1 billion, slightly above the consensus estimate of $21.07 billion. Despite the beat, the company’s core U.S. Foodservice Operations segment showed minimal volume growth of just 0.1%, with local case volume declining 0.2%.
Sysco’s operating income decreased 1.0% to $800 million, though adjusted operating income increased 2.9% to $898 million. The company maintained its full-year fiscal 2026 guidance, projecting sales growth of 3-5% and adjusted EPS growth of 1-3%.
"We are pleased with the start to our fiscal 2026, with solid improvement in our sales performance, margin management, and supply chain operations," said Kevin Hourican, Sysco’s Chair and CEO. "Our broadline local business was positive for the quarter, and improved sequentially each period of the quarter."
Gross profit increased 3.9% to $3.9 billion, with gross margin expanding 13 basis points to 18.5%. However, operating expenses rose 5.3%, driven by investments in business capacity and sales headcount, outpacing the revenue growth.
The International Foodservice Operations segment was a bright spot, with sales increasing 4.5% and adjusted operating income rising 13.1% to $147 million.
"Based on a strong Q1 and trends observed in October, we are confident in our full year guidance," said Kenny Cheung, Sysco’s CFO, noting that the outlook reflects approximately 5-7% EPS growth when excluding a $0.16 per share headwind from lapping lower incentive compensation in fiscal 2025.
During the quarter, Sysco returned $259 million to shareholders via dividends and reported a cash balance of $844 million with total liquidity of $3.5 billion.