Sysco Corp. reported modest year-over-year sales growth for its fiscal third quarter of 2025 but fell short of Wall Street expectations as adverse weather, tariff concerns, and weak consumer confidence weighed heavily on the foodservice industry. Despite these challenges, the global foodservice distribution leader pointed to progress in international markets, supply chain efficiency, and long-term salesforce development as key areas of strength.
For the quarter ending March 30, Sysco posted revenue of $19.6 billion, up 1.1% from $19.38 billion a year earlier, but missed analyst estimates by roughly $449 million. Net income was flat.
Total U.S. foodservice volume declined 2%, with local volume down 3.5%—a deceleration aligned with overall restaurant traffic trends. Sysco said it faced a sharp decline in foot traffic during January and February, driven by wildfires in California and historic winter storms across major regions.
“Q3 was a difficult quarter for the industry,” said Kevin Hourican, Sysco’s chairman and CEO, during the earnings call. “Consumer confidence has been shaken by trade policy uncertainty, and February’s restaurant traffic fell 5.7%—a drop that significantly impacted our business.”
Sysco’s national sales business posted flat volume growth and a 2.3% increase in revenue, while the SYGMA segment saw robust growth, with sales up 9.5% and year-to-date bottom-line growth of 17%. The company’s international segment stood out, delivering 4.5% local volume growth and a 17.4% increase in adjusted operating income—marking the sixth consecutive quarter of double-digit international profit gains.
Sysco acknowledged that hiring and turnover among sales consultants created a drag on performance, with executive leadership pointing to elevated colleague attrition in the first half of the year. However, management noted that newly hired sales consultants from 2024 are now approaching full productivity, and retention has improved.
“We expect our sales consultant turnover headwind to shift into a tailwind by fiscal 2026,” Hourican said. “April performance has already trended better than March, and we’re seeing early signs of market share gains.”
Tariff risks also loomed over the outlook, though Sysco emphasized that more than 90% of its food products are sourced locally within each country it operates. The company has formed a tariff management task force to mitigate potential supply disruptions and cost increases—particularly around key imports like tomatoes from Mexico.
In response to persistent margin pressures, Sysco is moving forward with $100 million in cost savings initiatives centered on strategic sourcing, logistics efficiencies, and corporate expense reductions. The company expects these efforts to contribute more meaningfully to the fourth quarter and early fiscal 2026.
Despite the challenging environment, Sysco continues to invest in long-term growth. It is opening new distribution centers in Pennsylvania, Florida, Ireland, and Sweden, and piloting two “Sysco to Go” Cash & Carry retail locations in Houston to serve smaller, value-conscious restaurant operators.
Looking ahead, Sysco lowered its fiscal 2025 guidance, citing the macroeconomic environment. It now expects full-year sales growth of approximately 3%—down from prior guidance of 4–5%—and adjusted EPS growth of at least 1%.
Chief financial officer Kenny Cheung emphasized discipline and cautious planning for Q4: “The volume drop in February was sharper than anticipated, and we’re adjusting expectations accordingly. However, April trends are encouraging, and we’re confident in the strength of our balance sheet and the trajectory of our cost savings.”
Analysts remain mixed. UBS’s Mark Carden noted that “regional restaurant demand remains soft,” but acknowledged Sysco’s expanding salesforce and stabilization of churn as encouraging signs. Barclays’ Jeff Bernstein pointed to improving international results and cost management but flagged that the EPS cut suggests limited operating leverage in the near term.
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