Sysco Corporation (NYSE: SYY) reported its financial results for the quarter ended March 31, 2020, on Tuesday before the market opens. The results missed analysts’ expectations.
Sysco slipped to a loss in the third quarter of 2020 from a profit last year due to lower sales and higher operating expenses. The top-line fell by 7% due to the impact of the COVID-19 crisis. Sysco has outlined key plans to ensure business and financial flexibility, while also preparing for the gradual demand recovery that it expects to occur once the pandemic crisis subsides.
Immediately after the onset of the virus, the company took significant actions to lower expenses. Sysco expects cost reduction realizations to take effect beginning in the fourth quarter. In the fourth quarter of fiscal 2020 alone, the company has removed more than $500 million of expenses from the business, which includes the difficult decision to cut staffing levels by about 33% through a combination of temporary workforce furloughs and permanent reductions in force.
The exit rate of Q3 saw a dramatic decline in volume, sales, and gross profit across all of the business segments as a result of the pandemic. From the low point at the end of March, trends in April have shown sequential weekly improvement that reflects further momentum and upward trajectory. The company expects additional improvement throughout the month of May as certain states allow restaurants to re-open their dining areas.