Company: SYY
Filing Date: 2025-01-29
Form Type: 10-Q
Source: 0000096021-25-000010
Chunk: 64

Company: SYSCO CORP
Filing Date: 2025-01-29
Form: 10-Q
Item: Item 1
Chunk 64
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2025. We believe the food-away-from-home sector is a healthy long-term growth market, and Sysco is diversified and well positioned as a market leader in food service.

Sales and Gross Profit Trends

Our sales and gross profit performance are influenced by multiple factors, including price, volume, inflation, customer mix and product mix. We experienced a 1.4% and 2.1% improvement in U.S. Foodservice Operations case volume in the second quarter and first 26 weeks of fiscal 2025, respectively, as compared to the second quarter and first 26 weeks of fiscal 2024. Our volume growth was primarily attributable to national volume growth of 4.3% and 4.9% in the second quarter and first 26 weeks of fiscal 2025, respectively, as compared to the second quarter and first 26 weeks of fiscal 2024. Our volume reflects our broadline and specialty businesses, except for our specialty meats business, which measures its volume in pounds.

We experienced inflation at a rate of 2.1% in the second quarter of fiscal 2025, at the total enterprise level, primarily driven by inflation in the dairy and poultry categories. We continued to be successful in managing this inflation, resulting in an increase in gross profit dollars. Gross margin decreased 11 and 18 basis points in the second quarter and first 26 weeks of fiscal 2025, respectively, as compared to the second quarter and first 26 weeks of fiscal 2024, primarily due to a shift in our customer mix driven by national volume growth, a decrease in Sysco brand penetration, and the timing of benefits from strategic sourcing initiatives.

Operating Expense Trends

Total operating expenses increased 4.4% and 4.0% during the second quarter and first 26 weeks of fiscal 2025, respectively, as compared to the second quarter and first 26 weeks of fiscal 2024. Total adjusted operating expenses increased 3.5% and 3.3% during the second quarter and first 26 weeks of fiscal 2025, respectively, as compared to the second quarter and first 26 weeks of fiscal 2024. Operating expenses increased primarily due to an increase in volumes. In addition, higher pay-related expenses, which includes investments in our business, including sales professionals, and depreciation expense related to new facilities also resulted in an increase in operating expenses in the second quarter and first 26 weeks of fiscal 2025. Adjusted operating expenses were 14.2%