Sysco's fiscal 2026 sales rose 3.9% to $84.6 billion, driven mostly by 3.0% food inflation, but higher sales-force, incentive and Jetro deal-related costs left operating income flat and GAAP EPS down 1.9% to $3.66 (adjusted EPS +3.4% to $4.61).
Revenue
$84.6B
+3.9% YoY
Net income
$1.8B
-3.9% YoY
Diluted EPS
$3.66
-1.9% YoY
Operating margin
3.7%
Sysco grew sales 3.9% to $84.6 billion in fiscal 2026, but GAAP profit fell as deal and interest costs piled up
Sysco, the largest foodservice distributor in the US (it trucks food and supplies to restaurants, hospitals, schools and hotels), closed its fiscal year on June 27, 2026 with sales up 3.9% to $84.55 billion and gross profit up 4.5% to $15.64 billion. Most of that growth came from higher prices rather than more boxes: product cost inflation ran at 3.0% across the company, while US case volume (the number of cases shipped) grew just 1.4%.
Below the gross-profit line the picture is weaker. Operating expenses rose 5.6%, faster than sales, so operating income was essentially flat ($3,095 million vs. $3,088 million, +0.2%). Interest expense jumped 12.9% and a $54 million loss on hedges tied to the pending Jetro Restaurant Depot acquisition hit "other expense", so net earnings fell 3.9% to $1,757 million and diluted EPS fell 1.9% to $3.66. Excluding what Sysco calls "Certain Items" (restructuring, transformation projects, acquisition costs and the Jetro-related financing charges), adjusted EPS rose 3.4% to $4.61.
This analysis is based on Sysco's annual report on Form 10-K for fiscal 2026, with fourth-quarter detail and fiscal 2027 guidance from its August 4, 2026 earnings release.
Key figures
Metric
FY2026
FY2025
YoY Change
Sales
$84,553M
$81,370M
+3.9%
Gross profit
$15,639M
$14,969M
+4.5%
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"bps" means basis points; 100 basis points equal one percentage point. For a distributor that keeps under four cents of operating profit on every dollar of sales, a 10 bps move in gross margin on $84.6 billion of sales is worth roughly $85 million of gross profit.
Where the growth came from: price first, volume second
Sysco says the single biggest factor in its sales and gross profit was inflation: product costs rose 3.0% for the year (2.8% in the fourth quarter), "primarily driven by inflation in the meat, seafood, and fresh produce categories." When the cost of a case of beef rises, Sysco passes it through, so sales rise even if no more cases move.
Volume helped too, but modestly. In US Foodservice (69.5% of sales), cases grew 1.4%, with local customers up 1.7% and national chain customers up 1.3%. The local/national split matters because local customers (independent restaurants that buy through Sysco sales reps) pay higher margins than large chains that negotiate national contracts. The 10-K attributes the full-year 10 bps gross margin gain to "strategic sourcing efforts and a shift in our customer mix driven by local case growth outpacing national case growth."
Volume improved late in the year. In the fourth quarter US Foodservice cases rose 2.5% and local cases 2.6%, and total company sales grew 4.7% to $22.1 billion.
Why operating profit did not follow gross profit
Gross profit grew $670 million, but operating expenses grew $663 million, leaving operating income up only $7 million. The 10-K lists the drivers: "sales headcount investments, increased restructuring and transformational project costs, higher incentive compensation, and higher acquisition and due diligence costs."
Some of that is one-off by Sysco's own definition:
Restructuring and transformation project costs: $287 million (vs. $183 million)
Acquisition-related costs, including intangible amortization and Jetro due diligence: $232 million (vs. $160 million)
Fiscal 2025 had a $92 million non-cash goodwill impairment on Guest Worldwide, its hotel-supply unit, that did not recur
Stripping those out, adjusted operating expenses still rose 5.1%, faster than 3.9% sales growth, mainly because of sales headcount and incentive pay. The earnings release puts the higher incentive compensation at $100 million for the year, about $0.16 of EPS. Even on Sysco's own adjusted basis, adjusted operating margin slipped from about 4.33% to 4.27%. The extra salespeople were hired to win local customers. So far they have produced 1.7% local volume growth, and on a full-year basis that has not paid for itself.
Segment detail
Segment
FY2026 sales
Sales growth
Operating income
Op. income growth
Op. margin
US Foodservice
$58,803M
+3.2%
$3,518M
+0.1%
6.0%
International Foodservice
$16,042M
+7.6%
$463M
+5.9%
2.9%
SYGMA (chain-restaurant delivery)
$8,623M
+2.5%
$94M
+16.0%
1.1%
Other (mainly Guest Worldwide)
$1,085M
-0.5%
$30M
n/m
2.8%
Global Support Center (corporate)
—
—
-$1,010M
costs +13.7%
—
US Foodservice gross margin was 19.11% vs. 19.09%, up only 2 bps. Adjusted operating income rose just 0.7% to $3,657 million because operating expenses rose 4.9%, "primarily driven by increases in colleague-related costs." In the fourth quarter, segment gross margin fell 26 bps to 19.2%.
International looks stronger in dollars than it was. Reported sales rose 7.6%, but a weaker dollar added 3.5 points. In constant currency (stripping out exchange-rate moves) sales grew 4.1%. Adjusted operating income rose 16.4%, or 14.0% in constant currency, driven by local case volume growth of about 4.3%. The release calls Q4 the segment's eleventh straight quarter of double-digit adjusted operating income growth.
SYGMA grew operating income $13 million on "continued improvements in the efficiency and performance of SYGMA's supply chain operations."
Global Support Center expenses rose $127 million (13.7%), including $162 million of Certain Items (technology transformation and acquisition/due-diligence costs).
One contradiction to note: Sysco-brand penetration in US Broadline (the share of cases sold under Sysco's own higher-margin labels) fell 59 bps to 35.4% for the full year, and fell 45 bps to 45.8% among local customers. Yet the earnings release credits the fourth quarter's gross profit partly to "positive mix shift from improved Sysco Brand penetration." Both statements can be true if penetration turned up late in the year, but the full year moved the wrong way on one of the company's own margin levers.
The fourth quarter: GAAP up, gross margin down
Q4 FY2026
Result
YoY
Sales
$22.1B
+4.7%
Gross margin
18.7%
-17 bps
Operating income
$983M
+10.6%
Adjusted operating income
$1.1B
+4.1%
Net earnings
$551M
+3.8%
Diluted EPS
$1.15
+4.5%
Adjusted EPS
$1.53
+3.4%
The 10-K explains the Q4 gross margin decline as "primarily due to the lapping of favorable benefits from strategic sourcing initiatives in the fourth quarter of fiscal 2025 and the increased cost of fuel across the business." Q4 GAAP operating income grew faster than adjusted (10.6% vs. 4.1%), partly because Q4 included the reversal of a legal-matter charge booked in Q3.
Below the operating line: the Jetro deal starts to cost money
On March 30, 2026 Sysco agreed to buy Jetro Restaurant Depot, a cash-and-carry wholesaler with 167 warehouse stores in 35 states serving over 725,000 independent restaurants and foodservice operators. The price is about $29.1 billion: $21.6 billion in cash plus 91.5 million shares of a new holding company, Sysco Holdings. Jetro's owners would hold about 16% of the combined company. Closing is expected by Sysco's fiscal third quarter of 2027, pending antitrust clearance under the Hart-Scott-Rodino Act.
The deal has not closed, but it already weighs on reported earnings:
Bridge loan fees. Sysco lined up a $22 billion bridge loan (short-term backup financing), later cut to $19 billion after a $3 billion term loan. Amortizing its fees added about $30 million of interest in fiscal 2026 and is expected to add about $96 million in fiscal 2027.
Rate-lock losses. Hedges on $6.3 billion of future debt lost $54 million in Q4. Because hedge accounting was not elected, future swings in their value will go straight through "other expense."
Buybacks suspended. Sysco repurchased only $200 million of stock in fiscal 2026 (vs. $1.3 billion in fiscal 2025) and does not expect to buy back shares in fiscal 2027. The dividend continues at $0.55 per quarter, and $2.16 per share was paid in fiscal 2026.
Sysco guides to about $770 million of interest expense in fiscal 2027 ($675 million adjusted), against $717 million in fiscal 2026, and that is before the permanent Jetro debt is issued. Liquidity was $4.8 billion at year-end and about $2.4 billion as of August 4, 2026. Net debt to adjusted EBITDA was about 2.7 times.
Cash flow
Operating cash flow rose 5.1% to $2,638 million. Capital spending fell to $700 million from $906 million, so free cash flow (cash from operations minus net capital spending) rose 16.3% to $2,114 million. The tax law signed on July 4, 2025 (OBBBA) lowered cash taxes paid in fiscal 2026, and the 10-K warns this "may change the timing of cash tax payments in future periods." Part of the free cash flow gain is therefore timing and lower capex rather than a better operating business. Net capex is expected to rise back to about $720 million in fiscal 2027.
Takeaway: Sysco's fiscal 2026 growth was mostly inflation. With 3.0% product inflation and only 1.4% more US cases, gross profit grew 4.5%, but the sales force and incentive pay built to win local restaurants grew costs faster still, so even adjusted operating margin narrowed. Fiscal 2027's 9–11% adjusted EPS growth target needs volume and the $100 million cost-out program to finally outrun expenses, while inflation is guided down to 1.5–2.0% and the Jetro deal pushes interest costs up.
Outlook
Management guidance for fiscal 2027 (excludes Jetro; the year has 53 weeks vs. 52):
Sales growth of 6%–7%, with product inflation of about 1.5%–2.0% and positive local case volume growth "as a result of continued productivity gains with sales professionals based on improving tenure"
Adjusted EPS growth of 9%–11%, which applied to $4.61 implies roughly $5.02–$5.12
About $100 million of cost savings, largely from AI-driven process changes (inventory forecasting, routing, back-office automation)
Effective tax rate of 23.7%–24.2%, up from 22.8% in fiscal 2026
About $76 million of extra amortization from rebranding Brakes in the UK as "Sysco GB" (treated as a Certain Item)
Demand backdrop. Sysco says it "experienced the effects of negative year-over-year restaurant foot traffic trends" in fiscal 2026 and expects traffic and the macro environment in fiscal 2027 to "remain generally consistent with fiscal 2026 conditions." In other words, management is not counting on diners returning to restaurants.
Our view. The guidance leans on factors that are partly mechanical. The 53rd week alone adds roughly two percentage points to sales growth. Inflation is expected to fall from 3.0% to 1.5–2.0%, which removes some of the price pass-through that carried fiscal 2026 sales. That leaves volume and cost savings to do more of the work. The Q4 acceleration (US cases +2.5%, local +2.6%) is the best evidence it can, but it came alongside a 17 bps drop in gross margin. The main number to watch in the first half of fiscal 2027 is whether adjusted operating expenses finally grow slower than gross profit. That did not happen for the full year in fiscal 2026. The GAAP-to-adjusted gap is also likely to widen: bridge-loan amortization, rate-lock swings, Jetro deal costs and the Sysco GB amortization all fall into Certain Items. Readers comparing Sysco with peers should look at GAAP EPS as well as the adjusted figure.