$SYY · SYSCO CORP
Sysco filed its Q1 FY2027 10-Q for the 13 weeks ended September 26, 2026. Sales grew 2.8% to $21.744B, net earnings rose 10.5% to $526M ($1.09 diluted EPS vs $0.99), and gross margin improved to 18.6% from 18.4%. However, operating income declined 10.4% to $717M as operating expenses rose 7.5% and interest expense jumped 51.7% to $261M. Results included a $234M gain on deal-contingent rate-lock transactions related to financing the Jetro Restaurant Depot (JRD) acquisition.
- Revenue +2.8% to $21.744B; net earnings +10.5% to $526M.
- Operating income fell 10.4% to $717M on 7.5% higher operating expenses.
- Interest expense surged 51.7% to $261M from $172M.
- Gross margin improved to 18.6% from 18.4%.
- International Foodservice operating income fell 28.1% to $82M.
Shares fell 9.33% to $74.11 in the regular session, with extended-hours last trade at $74.00 (-0.15% vs close). The decline reflects concern over margin compression and higher interest costs despite the headline EPS beat.
Sysco's top-line growth and EPS beat are overshadowed by margin compression and a 51.7% jump in interest expense tied to the JRD acquisition.
Foodservice distribution peers face similar cost inflation and rising interest expense; Sysco's JRD acquisition adds leverage that pressures near-term profitability.
Rising interest expense (up 51.7%) and higher operating expenses are compressing operating margin to 3.3% from 3.8%. The JRD acquisition adds debt and integration risk.