The earnings results did, however, exceed analysts’ expectations of 49 cents per share, according to a Thompson Reuters poll. Cost-cutting measures, including a headcount reduction of roughly 6 percent for the year, “significant” reductions in bonuses and commissions and gains related to company-owned insurance, are credited for the earnings results.
For the full fiscal year, Sysco reported net earnings of $1 billion, or $1.77 per share, on revenue of $36.8 billion, compared with net earnings of $1.1 billion, or $1.81 per share, on revenue of $37.5 billion, in 2008.
In the early weeks of fiscal 2010, the company has recorded "modest levels of deflation" -- as measured by the change in cost of goods -- after more than two years of about 6 percent annualized inflation, CEO William DeLaney said on a conference call with analysts.
According to a report in the Houston Business Journal, Sysco had passed on the rising costs to its customers, partially offsetting the decline in volumes the past few quarters. However, as food costs decrease, the company's ability to raise prices is constrained by a tough promotional environment.
DeLaney said sales comparisons will be particularly challenging early in 2010 due to last year's sales growth, which was fueled by prices increases.