Sysco to lay off some fi­nance em­ploy­ees in early ’19

Houston Chronicle - - BUSINESS - By Paul Taka­hashi STAFF WRITER paul.taka­[email protected] twit­ter.com/paultaka­hashi

Sysco, the na­tion’s largest food dis­trib­u­tor, plans to lay off an undis­closed num­ber of fi­nance em­ploy­ees in early 2019.

The Hous­ton-based com­pany, which has more than 67,000 em­ploy­ees, said the lay­offs are part of a na­tional ef­fort to stream­line its busi­ness amid ris­ing trans­porta­tion and food costs.

“As part of this ini­tia­tive, the com­pany an­tic­i­pates the loss of em­ploy­ment for a mod­est num­ber of as­so­ciates at each of our U.S. broad­line op­er­at­ing com­pa­nies,” Sysco said in a state­ment. “We take se­ri­ously any de­ci­sion that im­pacts our as­so­ciates, but feel this is a nec­es­sary step to bet­ter serve our cus­tomers and con­tinue to po­si­tion the com­pany for suc­cess.”

A spokes­woman de­clined to say how many em­ploy­ees are be­ing laid off. Af­fected em­ploy­ees will be of­fered sev­er­ance and out­place­ment as­sis­tance.

Most of the lay­offs in the Hous­ton area will take place at Sysco’s shared ser­vices cen­ter in Cy­press, where the com­pany has cen­tral­ized some of its ad­min­is­tra­tive busi­ness func­tions such as ac­count­ing, cus­tomer sup­port and pay­roll.

Al­though some fi­nance po­si­tions are be­ing elim­i­nated, Sysco said it plans to hire other work­ers at its Cy­press fa­cil­ity off U.S. 290, re­sult­ing in a net gain in jobs over the long term, a spokes­woman said.

The lay­offs come even as Sysco posted a $431 mil­lion profit, rep­re­sent­ing a 17.2 per­cent in­crease year over year, dur­ing its first quar­ter, which ended Sept. 29. How­ever, Sysco failed to meet Wall Street ex­pec­ta­tions as the com­pany’s op­er­at­ing ex­penses grew 4.7 per­cent over the past year to $2.3 bil­lion, while sales rose 3.9 per­cent over the same pe­riod to $15.2 bil­lion.

“Our prob­lem is our op­er­at­ing ex­penses. They’re grow­ing faster than what we’re get­ting on case growth,” Tom Bené, Sysco’s pres­i­dent and CEO, said Nov. 5 dur­ing a con­fer­ence call with an­a­lysts. “That’s our is­sue, and we’ve got to get that back in check.”

Sysco has strug­gled for months to con­tain ris­ing trans­porta­tion costs caused by a na­tional truck driver short­age. The com­pany, like many of its com­peti­tors, has been forced to raise wages, pay over­time and dan­gle in­cen­tives to re­cruit and re­tain drivers in the tight la­bor mar­ket.

The U.S. has a short­age of 51,000 semi-trailer truck drivers, ac­cord­ing to the Amer­i­can Truck­ing As­so­ci­a­tions, and that fig­ure is ex­pected to triple in the com­ing decade as older drivers re­tire. Truck drivers are highly sought in a va­ri­ety of fields from e-com­merce and lo­gis­tics to en­ergy and food ser­vice.

Ris­ing trans­porta­tion and food costs have eaten into Sysco’s bot­tom line and caused its stock to fall from its Au­gust peak of $75.78 to $65.02 as of close of busi­ness Fri­day.

Sysco sells, mar­kets and dis­trib­utes chilled and frozen food prod­ucts to restau­rants, hospi­tals, schools, ho­tels and other in­sti­tu­tional clients. The com­pany op­er­ates 330 dis­tri­bu­tion fa­cil­i­ties world­wide, serv­ing more than 600,000 cus­tomer lo­ca­tions. The com­pany had sales of more than $58 bil­lion in its most re­cent fis­cal year, which ended June 30.

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