Dive Brief:
- Sysco reported a 0.9% sales increase to $12.6 billion for the first fiscal quarter 2016, which still just missed analysts' estimates of $12.8 billion.
- The company's profit fell 12% to $244.4 million from $278.8 million.
- Sysco's gross profit rose by 2.3% to $2.2 billion, including a gross margin boost of 23 basis points to 17.81%.
Dive Insight:
Sysco outlined its three-year cost-cutting and sales-boosting plan in September, which the company hopes will increase annual operating income by at least $400 million and by 2018 provide a 15% return on invested capital.
"Certainly cost reduction is a part of that, but it's not the end goal. Growth is important," Sysco president and CEO Bill DeLaney told The Wall Street Journal at the time of the plan's announcement.
In the previous quarter, Sysco had reported a 71% plunge in quarterly profit due mainly to $430 million in costs related to the failed acquisition of rival US Foods Inc.
Less than a week later, Sysco's stock soared 7.4% to a 20-month high after activist Trian Fund Management, founded by investor Nelson Peltz, disclosed a 7.1% stake in the company. Trian said at the time that Sysco was not meeting its potential and that it may seek representation on Sysco's board. A few days later, Sysco announced that it was adding Peltz and Trian's Josh Frank to its board.