Jan 27 (Reuters) - Food distributor Sysco SYY.N lifted its annual profit forecast and beat estimates for both second-quarter profit and sales on Tuesday, as strong demand for its steaks, fillets and frozen-food products helped the company's U.S. business continue its recovery.
WHY IT'S IMPORTANT
Sysco, which supplies to fast-food chains such as KFC and Subway, benefitted from robust customer visits to restaurants and improved demand for its U.S. foodservice offerings, with higher-income Americans continuing to splurge even as the price impact of U.S. President Donald Trump's volatile trade policies turned lower-income households cautious.
CONTEXT
Sysco has been working to cut expenditures by reducing shipping expenses and renegotiating supplier contracts, while also tightening warehouse and inventory spending, helping it offset rising input costs.
The company's strong international business also continued to outperform, with sales rising 7.3% and gross margin expanding by 42 basis points to 20.8% in the quarter ended December 27.
KEY QUOTE
"We delivered our third consecutive quarter of sequentially improving local case growth. More importantly, U.S. Foodservice local case volume is now positive, having delivered positive 1.2% case volume growth in the quarter," said CEO Kevin Hourican.
NUMBERS
Sysco now expects fiscal 2026 adjusted earnings per share to grow at the high end of 5% to 7%, or $4.50 to $4.60, compared with its previous forecast of 1% to 3% growth.
The company's quarterly adjusted profit of 99 cents per share slightly beat analysts' estimates of 98 cents per share, according to data compiled by LSEG.
U.S. foodservice segment sales were up 2.4% during the quarter, compared with a 1.4% rise a year earlier.
Its quarterly net sales of $20.76 billion were in line with analysts' estimates, while quarterly gross margin expanded 15 basis points to 18.3%.
MARKET REACTION
Shares of the Texas-based company, which lost about 4% in value in 2025, were up around 3.7% in premarket trading.
(Reporting by Sanskriti Shekhar in Bengaluru; Editing by Jonathan Ananda)
((Sanskriti.Shekhar@thomsonreuters.com))