A foodservice distributor that delivers food, equipment, and supplies to restaurants, hospitals, schools, and other meal-serving places — one of the world's largest, hauling everything from fresh produce to napkins. Born in 1969 when several regional distributors merged, its name comes from "Systems and Services Company." Its brands include FreshPoint produce and SYGMA, which custom-delivers to fast-food chains.
10-K · Fiscal year ended Jun 27, 2026 · SEC filing ↗
Sysco's local case volume returned to growth, but a $1.2B termination fee on the Jetro deal and rising costs cut net earnings 3.9%.
Sysco's U.S. local case volume returned to growth after a year of decline, but the still fell. rose 3.9% to $84.6 billion and edged up 0.1 points to 18.5%, yet net earnings dropped 3.9% to $1.8 billion as restructuring costs and a $54 million loss on deal-contingent rate locks for the Jetro Restaurant Depot acquisition weighed on results. The core distribution business is stabilizing, but the pending $29.1 billion Jetro deal now dominates the risk profile.
Key takeaways
U.S. Foodservice local case volume returned to growth in the second half of the year, rising 2.5% in Q3 and continuing into Q4, after four consecutive quarters of decline that culminated in a 3.5% drop in Q3 FY2025.
expanded 0.1 points to 18.5% for the full year, as strategic sourcing savings and a favorable shift back toward higher-margin local customers in the second half offset the national account mix that had compressed margin earlier in the year.
Section summaries
Business
Sysco is the global leader in foodservice distribution, serving restaurants, healthcare, education, and lodging with a broad product line.
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Sysco operates through three reportable segments: , , and , which serves quick-service chain restaurants.
The company announced a proposed $29.1 billion merger with Jetro Restaurant Depot, a cash-and-carry wholesaler, expected to close by the third quarter of fiscal 2027.
No single customer accounted for 10% or more of total sales, and restaurants represent the largest customer type at 59% of fiscal 2026 sales.
Sysco estimates it serves about 18% of an approximately $377 billion U.S. foodservice market and believes its sales are the highest of any foodservice distributor in the U.S. and Canada.
Reported was nearly flat at $3.1 billion, as $149 million in restructuring, transformation, and acquisition-related costs in Q3 alone—tied to the Jetro deal and efficiency programs—consumed the gains from higher volume.
fell 3.9% to $1.757 billion, with down 1.9% to $3.66, pressured by a $54 million loss on deal-contingent rate locks and $30 million in , both related to the planned Jetro Restaurant Depot acquisition.
rose 20.8% to $1.938 billion, driven by higher and a $168 million reduction in net , and the company paid $1.037 billion in dividends while pausing share repurchases for the year.
The company announced a proposed $29.1 billion acquisition of Jetro Restaurant Depot, expected to close by Q3 FY2027, and has executed on $6.3 billion of future debt to mitigate interest rate risk on the financing.
What changed
The U.S. Foodservice local case volume decline that defined FY2025 reversed: after a 3.5% drop in Q3 FY2025 and a 0.2% decline in Q1 FY2026, local volume grew 0.4% in Q2 and accelerated to 2.5% in Q3, settling the question of whether the trend would deepen or stabilize.
The compression from the national account mix shift—flagged as a persistent concern across FY2025—began to reverse in the second half of FY2026, with Q3 gross margin expanding 0.3 points to 18.6% as the customer mix shifted favorably, a clear inflection from the 0.2-point contraction in Q2.
The strategic sourcing benefits management had referenced for multiple quarters finally materialized, contributing to the 0.1-point full-year expansion to 18.5%, though the 19.0% pre-pandemic level remains out of reach.
The Jetro Restaurant Depot acquisition, announced during the year, introduced a new and material risk layer not present in any prior filing, including a $1.164 billion termination fee, $6.3 billion in deal-contingent rate locks, and an FTC second request that extends regulatory uncertainty.
What to watch
Q1 FY2027 U.S. Foodservice local case volume growth against the 2.5% Q3 FY2026 rate, to see if the recovery is sustained for a third straight quarter and whether the gap with national account growth continues to narrow.
Progress toward the Jetro Restaurant Depot acquisition closing, including the FTC's antitrust review outcome and the finalization of permanent financing, given the $1.164 billion termination fee and the $6.3 billion in that will flow through earnings if the deal fails.
FY2027 trajectory from the 18.5% FY2026 base, and whether the $100 million in planned cost savings from technology and efficiency initiatives can offset the 1.5-2.0% inflation management expects.
The resumption and pace of share repurchases, after management paused them in FY2026, and whether the Jetro acquisition financing needs further delay the return of capital to shareholders.
The company employed approximately 75,000 people as of June 27, 2026, with about 14% represented by unions, and operated 333 distribution facilities across North America and Europe.
Sysco faces margin pressure from inflation, labor, and competition, while its pending $21.6B Jetro Restaurant Depot acquisition adds significant financing, integration, and regulatory risks.
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The pending Transactions to acquire Jetro Restaurant Depot for a $21.6 billion cash portion introduce material risks including failure to close, a potential $1.164 billion termination fee, and substantial new debt financing challenges.
The FTC issued a 'second request' for information on the Transactions, extending the HSR waiting period and creating uncertainty around potential antitrust conditions, delays, or required divestitures.
Low industry margins make the company vulnerable to prolonged inflation or deflation, which can compress profitability if product cost changes cannot be passed to customers in a timely manner.
A shift in customer mix toward lower-margin multi-unit customers could reduce overall gross and operating margins, especially if sales to higher-margin locally managed customers do not keep pace.
The company's growing use of artificial intelligence in operations poses new risks related to operational disruptions, data protection non-compliance, and an evolving, uncertain regulatory landscape.
Labor shortages, rising labor costs, and the need to renegotiate union contracts covering 14% of employees could increase expenses and lead to work stoppages.
Sysco operates 333 distribution facilities totaling 58.7M sq ft globally, with 63.6% owned and the rest leased.
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The U.S. and its territories host 201 facilities (45.5M sq ft), with California, Florida, Texas, and Illinois holding 25, 19, 15, and 12 respectively.
International operations include 45 facilities in the UK, 41 in France, 27 in Canada, and smaller footprints across Sweden, Ireland, Panama, Costa Rica, Belgium, and the Bahamas.
Sysco owns 37.3M sq ft (63.6%) of distribution space; leases expire between fiscal 2027 and 2112, excluding renewal options.
The company owns its 634,000 sq ft Houston headquarters and is constructing expansions at U.S. and European sites that collectively contributed about 2% of fiscal 2026 sales.
A fleet of approximately 19,000 delivery vehicles—mostly refrigerated—is 88% owned, with the remainder leased.
From time to time, we may be party to legal proceedings that arise in the ordinary course of our business. We do not believe there are any pending legal proceedings that, individually or in the aggregate, will have a material adverse effect on the company’s financial condition,…
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From time to time, we may be party to legal proceedings that arise in the ordinary course of our business. We do not believe there are any pending legal proceedings that, individually or in the aggregate, will have a material adverse effect on the company’s financial condition, results of operations or cash flows. The outcome of litigation is inherently uncertain. If one or more legal matters were resolved against the Company in a reporting period for amounts above management’s expectations, the Company’s financial condition and operating results for that reporting period could be materially adversely affected.
Environmental Matters
Item 103 of SEC Regulation S-K requires disclosure of certain environmental matters in which a governmental authority is a party to the proceedings and when such proceedings either (i) involve the potential for monetary sanctions that Sysco’s management reasonably believes will exceed a specified threshold or (ii) are material to its business or financial condition. Pursuant to this item, Sysco has chosen a reporting threshold for such proceedings of $1 million. Applying this threshold, there are no environmental matters to disclose for this period, nor does the company expect a material adverse effect on its business or financial condition.
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Sysco's FY26 sales rose 3.9% to $84.6B on inflation and volume, but net earnings fell 3.9% to $1.8B on higher costs.
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Total sales grew 3.9% to $84.6 billion, driven by 3.0% enterprise inflation and volume growth, including contributions from recent acquisitions.
increased 4.5% to $15.6 billion, with up 10 to 18.5%, primarily due to strategic sourcing and a favorable shift to higher-margin local customers.
was nearly flat at $3.1 billion as gains were offset by higher sales headcount investments, restructuring costs, and acquisition-related expenses.
decreased 3.9% to $1.8 billion, impacted by a $54 million loss on deal-contingent rate locks and $30 million in bridge loan related to the planned Jetro Restaurant Depot acquisition.
increased 16.3% to $2.1 billion, driven by higher and a $168 million reduction in net .
For fiscal 2027, Sysco expects 6-7% growth, inflation of 1.5-2.0%, and approximately $100 million in cost savings from technology and efficiency initiatives.
Quantitative and Qualitative Disclosures About Market Risk
The company faces interest rate, currency, fuel, and investment risks, using swaps and operational measures to manage exposures.
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At June 27, 2026, 83% of $13.5B total debt was fixed-rate; a 100 rate shift on $2.3B fixed-to-floating swaps would change fair value by ~$140M.
Forward-starting swaps on $2B notional for expected FY2027 debt issuance carry ~$120M fair-value sensitivity to a 100 rate move.
Deal-contingent rate locks on $6.3B for the JRD acquisition are marked to market, with a 100 change impacting fair value and earnings by ~$425M.
A 10% adverse currency move on the fiscal 2026 weighted rate would lower sales by 1.7%, with immaterial operating-income impact; CAD cross-currency swaps hedge Canadian net investment.
Diesel swaps cover ~80% of bulk fuel purchases for FY2027; a 10% price rise on unhedged volumes would increase fuel costs by ~$9M.
A 10% decline in U.S. Retirement Plan assets would raise FY2027 pension expense by $25M and reduce equity by $259M.
Sysco's FY2026 financial statements received an unqualified audit opinion, with management and auditors confirming effective internal control over financial reporting.
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Total sales grew to $84.6 billion in fiscal 2026, up from $81.4 billion in fiscal 2025, driven by increases across all reportable segments.
decreased to $1.757 billion, or $3.66 per diluted share, compared to $1.828 billion, or $3.73 per diluted share, in the prior year.
The company's was 22.8% for fiscal 2026, down from 24.3% in fiscal 2025, partly due to changes in valuation allowances.
Sysco entered into an agreement to acquire Jetro Restaurant Depot for approximately $29.1 billion, with the transaction expected to close by the third quarter of fiscal 2027.
of $5.2 billion was tested for , and the audit report identified its valuation as a critical audit matter due to significant estimation required.
Cash provided by operating activities was $2.638 billion, and the company paid $1.037 billion in dividends during fiscal 2026.