Company: SYY
Filing Date: 2025-04-30
Form Type: 10-Q
Source: 0000096021-25-000037
Chunk: 3

Company: SYSCO CORP
Filing Date: 2025-04-30
Form: 10-Q
Item: Item 2
Chunk 3
---
 the full fiscal 2025 year, as compared to our previous fiscal 2025 sales growth target of 4-5%, as a result of lower than expected volume. Gross margin decreased 35 and 25 basis points in the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024, primarily due to a shift in our customer mix driven by national sales volumes outpacing local sales volumes and a decrease in Sysco brand penetration rates.

Operating Expense Trends

Total operating expenses increased 0.5% and 2.8% during the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024. Total adjusted operating expenses decreased 0.1% and increased 2.2% during the third quarter and first 39 weeks of fiscal 2025, respectively, as compared to the third quarter and first 39 weeks of fiscal 2024. Operating expenses increased primarily due to costs associated with expanded building capacity, including depreciation expense related to new facilities, sales headcount investments and higher supply chain labor rates, partially offset by lower annual bonus incentive compensation in the third quarter and first 39 weeks of fiscal 2025. Adjusted operating expenses were 14.3% and 14.2% of sales during the third quarter and first 39 weeks of fiscal 2025, respectively, which is a 17-basis point and 16-basis point improvement from the third quarter and first 39 weeks of fiscal 2024, respectively, due to lower annual bonus incentive compensation and recent supply chain and Global Support Center efficiency initiatives. 

Earnings Per Share Trends

Reflecting the current uncertain macroeconomic environment, including concerns regarding consumer confidence, we expect earnings per share and adjusted earnings per share growth of approximately 1% for the full fiscal 2025 year, as 

29

compared to our previous fiscal 2025 adjusted earnings per share growth target of 6-7% primarily due to lower than expected volume growth.

Divestitures

In the second quarter of fiscal 2025, we sold our interest in our joint venture partnership in Mexico, which was a part of our International Foodservice Operations. This operation was not significant to Sysco’s business, and the divestiture will facilitate our efforts to improve our return on invested capital position. 

Mergers and Acquisitions  

In the second quarter