Analyst Note| Rebecca Scheuneman, CFA |
In its fiscal fourth quarter, Sysco reported sales of $16.1 billion, a 4% increase over the same period in 2019, besting our expectations of a 16% drop. Sysco continues to gain share, having reported an additional $200 million in net new national account business, taking the total to $2 billion since the onset of the pandemic, in addition to previously disclosed share gains with independent restaurants. We think Sysco is leveraging its scale-based cost advantage, which underpins its narrow moat rating, to secure product and labor, which is short across the industry, helping it to win new business. This momentum seems to have carried into the current quarter, as Sysco said trends accelerated in July, in contrast to US Foods’ comments that it experienced a 100-basis-point deceleration in sales the last two weeks of July, likely due to the Delta variant.