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Sysco (SYY) to Aid FreshPoint's Growth With BIX Produce Buyout
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Sysco Corporation (SYY - Free Report) has been focused on achieving growth via prudent acquisitions. Moving on these lines, this food company unveiled that its specialty produce company, FreshPoint, will take over BIX Produce.
This buyout will help FreshPoint strengthen its geographical presence in unexplored areas and enhance its specialty produce offerings. The deal will also add a superior-quality production and warehouse facility of 200,000 sq. ft. to FreshPoint’s operations.
Based in Minnesota, BIX Produce is a leading specialty produce and fresh-cut distributor that caters to several restaurants and other foodservice customers across Minnesota, Wisconsin, the Dakotas, Illinois and Iowa. Apart from fresh cut and whole food products, Sysco expects BIX Produce to provide a range of chef-crafted, grab-and-go items. These include options in categories like power snack packs, breakfasts, parfaits, puddings, salads, fruit cups, veggie cups, wraps and sandwiches.
FreshPoint Acts as a Growth Engine
The acquisition of BIX Produce underscores Sysco’s focus on growing its distribution network and customer base and boosting long-term growth. In February 2022, the company concluded the acquisition of The Coastal Companies, which also operates under Sysco’s specialty produce business – FreshPoint.
Sysco delivered a solid business performance in the third quarter of fiscal 2023, wherein it saw robust FreshPoint business performance. The fast-growing and high-margin specialty space is a priority for Sysco.
The acquisition of BIX Produce also goes in tandem with SYY’s Recipe for Growth strategy.
Image Source: Zacks Investment Research
Recipe for Growth on Track
Sysco has been focused on its Recipe for Growth, which is strengthening the company’s capacities across sales and the supply chain. The program involves five strategic priorities aimed at enabling SYY to grow 1.5 times faster than the market by FY24 end. The five strategic pillars include enhancing customers’ experience via digital tools. In this regard, the company’s Sysco Shop platform and the new pricing software are working well.
Further, the company is focused on improving the supply chain to cater to customers efficiently and consistently with better delivery and omnichannel inventory management. Next, Sysco aims at providing customer-oriented merchandising and marketing solutions to augment sales.
The company also targets having team-based selling, with an emphasis on important cuisines. Finally, Sysco is focused on cultivating new capacities, channels and segments, alongside sponsoring investments via cost-saving initiatives. Sysco expects to witness continued gains from the Recipe for Growth plan and remains on track to grow more than 1.35 times the market in fiscal 2023.
What Else to Know?
Sysco has been encountering product cost inflation in the U.S. Foodservice unit for a while now. In the third quarter of fiscal 2023, this Zacks Rank #4 (Sell) company witnessed product cost inflation of 4.9%, which was measured by estimated changes in product costs, mainly in the dairy and frozen categories.
Apart from this, adjusted operating expenses rose 9.3%. Sysco expects low-single-digit inflation in the fourth quarter. However, a focus on Recipe for Growth, as highlighted by the abovementioned moves, places Sysco well in the long run.
Shares of the company have tumbled 6% in the past six months against the industry’s growth of 0.2%.
Solid Staple Stocks
Some better-ranked consumer staple stocks are The Kraft Heinz Company (KHC - Free Report) , McCormick & Company, Incorporated (MKC - Free Report) and Lamb Weston (LW - Free Report) .
The Zacks Consensus Estimate for The Kraft Heinz Company’s current fiscal-year sales and earnings suggests growth of 2.8% and 3.6%, respectively, from the year-ago reported figures.
McCormick, which operates as a manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2. MKC has a trailing four-quarter negative earnings surprise of 3.7%, on average.
The Zacks Consensus Estimate for McCormick’s current fiscal-year sales and earnings suggests growth of 6.4% and 3.6%, respectively, from the year-ago reported numbers.
Lamb Weston, which is a frozen potato product company, currently carries a Zacks Rank #2. LW has a trailing four-quarter earnings surprise of 47.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests growth of 30% and 117.3%, respectively, from the year-ago reported numbers.
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Sysco (SYY) to Aid FreshPoint's Growth With BIX Produce Buyout
Sysco Corporation (SYY - Free Report) has been focused on achieving growth via prudent acquisitions. Moving on these lines, this food company unveiled that its specialty produce company, FreshPoint, will take over BIX Produce.
This buyout will help FreshPoint strengthen its geographical presence in unexplored areas and enhance its specialty produce offerings. The deal will also add a superior-quality production and warehouse facility of 200,000 sq. ft. to FreshPoint’s operations.
Based in Minnesota, BIX Produce is a leading specialty produce and fresh-cut distributor that caters to several restaurants and other foodservice customers across Minnesota, Wisconsin, the Dakotas, Illinois and Iowa. Apart from fresh cut and whole food products, Sysco expects BIX Produce to provide a range of chef-crafted, grab-and-go items. These include options in categories like power snack packs, breakfasts, parfaits, puddings, salads, fruit cups, veggie cups, wraps and sandwiches.
FreshPoint Acts as a Growth Engine
The acquisition of BIX Produce underscores Sysco’s focus on growing its distribution network and customer base and boosting long-term growth. In February 2022, the company concluded the acquisition of The Coastal Companies, which also operates under Sysco’s specialty produce business – FreshPoint.
Sysco delivered a solid business performance in the third quarter of fiscal 2023, wherein it saw robust FreshPoint business performance. The fast-growing and high-margin specialty space is a priority for Sysco.
The acquisition of BIX Produce also goes in tandem with SYY’s Recipe for Growth strategy.
Image Source: Zacks Investment Research
Recipe for Growth on Track
Sysco has been focused on its Recipe for Growth, which is strengthening the company’s capacities across sales and the supply chain. The program involves five strategic priorities aimed at enabling SYY to grow 1.5 times faster than the market by FY24 end. The five strategic pillars include enhancing customers’ experience via digital tools. In this regard, the company’s Sysco Shop platform and the new pricing software are working well.
Further, the company is focused on improving the supply chain to cater to customers efficiently and consistently with better delivery and omnichannel inventory management. Next, Sysco aims at providing customer-oriented merchandising and marketing solutions to augment sales.
The company also targets having team-based selling, with an emphasis on important cuisines. Finally, Sysco is focused on cultivating new capacities, channels and segments, alongside sponsoring investments via cost-saving initiatives. Sysco expects to witness continued gains from the Recipe for Growth plan and remains on track to grow more than 1.35 times the market in fiscal 2023.
What Else to Know?
Sysco has been encountering product cost inflation in the U.S. Foodservice unit for a while now. In the third quarter of fiscal 2023, this Zacks Rank #4 (Sell) company witnessed product cost inflation of 4.9%, which was measured by estimated changes in product costs, mainly in the dairy and frozen categories.
Apart from this, adjusted operating expenses rose 9.3%. Sysco expects low-single-digit inflation in the fourth quarter. However, a focus on Recipe for Growth, as highlighted by the abovementioned moves, places Sysco well in the long run.
Shares of the company have tumbled 6% in the past six months against the industry’s growth of 0.2%.
Solid Staple Stocks
Some better-ranked consumer staple stocks are The Kraft Heinz Company (KHC - Free Report) , McCormick & Company, Incorporated (MKC - Free Report) and Lamb Weston (LW - Free Report) .
The Kraft Heinz Company, a food and beverage product company, currently has a Zacks Rank #2 (Buy). KHC has a trailing four-quarter earnings surprise of 10.7%, on average. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for The Kraft Heinz Company’s current fiscal-year sales and earnings suggests growth of 2.8% and 3.6%, respectively, from the year-ago reported figures.
McCormick, which operates as a manufacturer, marketer and distributor of spices, seasonings, specialty foods and flavors, currently carries a Zacks Rank #2. MKC has a trailing four-quarter negative earnings surprise of 3.7%, on average.
The Zacks Consensus Estimate for McCormick’s current fiscal-year sales and earnings suggests growth of 6.4% and 3.6%, respectively, from the year-ago reported numbers.
Lamb Weston, which is a frozen potato product company, currently carries a Zacks Rank #2. LW has a trailing four-quarter earnings surprise of 47.6%, on average.
The Zacks Consensus Estimate for Lamb Weston’s current fiscal-year sales and earnings suggests growth of 30% and 117.3%, respectively, from the year-ago reported numbers.