Food distributor Sysco cuts annual forecasts on weak restaurant traffic

(Reuters) -Sysco's third-quarter results missed estimates and the company lowered its annual forecasts on Tuesday as the food distributor warned of worsening consumer sentiment against the backdrop of the Trump administration's tariffs.

The company added that the wildfires in California and bad weather conditions also weighed on demand for supply of fresh fruits, vegetables and meat products to restaurants.

Sysco's customers include restaurant chains KFC, Subway, Burger King and Applebees.

An anticipated surge in product prices following U.S. President Donald Trump's tariff policies on trading partners is expected to affect restaurant traffic, with people opting to eat more at home.

The levies and the retaliatory tariffs also pose a threat to Sysco's international operations. The company's Canada operations accounted for about 8% of the company's annual sales in 2024.

The company, meanwhile, has been making efforts to source raw materials from suppliers at lower prices and keep production costs in check.

Sysco now expects fiscal 2025 sales to increase about 3%, compared with prior expectations of it to grow between 4% and 5%.

The company also forecast full-year adjusted earnings per share to rise by at least 1%, compared with the previous forecast of 6% to 7% growth.

Sysco's third-quarter sales rose 1.1% to $19.6 billion, compared with the average analyst estimate of $20.04 billion, according to data compiled by LSEG.

On an adjusted basis, the company earned 96 cents per share, missing expectations of $1.03.

(Reporting by Neil J Kanatt in Bengaluru)

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