Sysco Reaffirms EPS Growth Target as Q1 Sales Rise 2.8% to $21.7 Billion; Names New CFO
Sysco reported a 10.1% rise in first-quarter fiscal 2027 earnings per share to $1.09 and reaffirmed its full-year adjusted EPS growth target, even as the food distributor warned that sales growth will land at the low end of its range because of softer food inflation.
Sales for the 13 weeks ended Sept. 26 increased 2.8% to $21.7 billion, according to the earnings release Sysco filed with an 8-K on Tuesday. Net earnings rose 10.5% to $526 million, and adjusted EPS increased 3.5% to $1.19 from $1.15.
Sysco also made interim finance chief Brandon Sewell its permanent chief financial officer, effective Nov. 1.
Volume up, operating income down
U.S. Foodservice case volume grew 2.6%, and local case volume rose 2.7%, compared with a 0.2% decline in local volume a year earlier. Gross profit increased 3.8% to $4.1 billion, and gross margin widened 18 basis points to 18.6%, helped by local volumes, tariff-related benefits, sourcing efficiencies and Sysco Brand penetration.
Operating income fell 10.4% to $717 million, which the company attributed to acquisition costs tied to its pending Jetro Restaurant Depot deal. Adjusted operating income rose 3.2% to $927 million.
"We are pleased to report a strong start to fiscal 2027," Chair and CEO Kevin Hourican said in the release, adding that Sysco grew profitably "despite continued softness in restaurant foot traffic, higher than expected fuel costs, and lower than expected U.S. food cost inflation."
Segments
U.S. Foodservice Operations sales rose 2.4% to $15.1 billion, and the segment's operating income increased 1.6% to $894 million. Adjusted operating income there grew 2.7% to $941 million.
International Foodservice Operations sales climbed 5.1% to $4.2 billion, or 6.0% in constant currency. The segment's GAAP operating income dropped 28.1% to $82 million, while adjusted operating income jumped 12.2% to $165 million.
Guidance and cash
Sysco said it remains confident in adjusted EPS growth of 9.0% to 11.0% for fiscal 2027, with local volume growth assumptions unchanged at an estimated 2.5%. Full-year sales growth is now expected at the lower end of its 6.0% to 7.0% range, reflecting a lower inflation environment.
The company said its fiscal 2027 guidance includes $100 million of expected AI-enabled net cost savings, with benefits accelerating in the second half.
Sysco returned $264 million to shareholders through dividends in the quarter. Cash flow from operations was $278 million, and free cash flow was $230 million.
New CFO pay package
Sewell, who has served as interim CFO since March 6, was named executive vice president and CFO, according to the 8-K. His package includes a $775,000 base salary, a target annual incentive of 125% of salary, a target long-term incentive award of 350% of salary, a one-time restricted stock unit grant with a $500,000 target value and a one-time supplemental fiscal 2027 award with a $1,000,000 aggregate target value.
By the numbers
- Sales: $21.7 billion, up 2.8%
- Diluted EPS: $1.09, up 10.1%
- Adjusted EPS: $1.19, up 3.5%
- Adjusted operating income: $927 million, up 3.2%
- U.S. local case volume: up 2.7%
- Fiscal 2027 adjusted EPS growth target: 9.0% to 11.0%, reaffirmed
Sources
- Sysco Form 8-K with first-quarter fiscal 2027 earnings release and executive appointment, filed Nov. 3, 2026 (accession 0000096021-26-000046)
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