Can someone give me a brief explanation for the low profit margin? I've followed SYY for a while, and haven't seen any real problems with this...just curious. I know the economy affects everyone. Gas prices...I would assume SYY has to adjust their prices as oil prices rise/fall (not sure how that works...but i know it has to one way or the other).
something tells me you boght this POS without fully understanding what a food distributor does. Wait a minute .... yep .... you are a moron. Check out who is backing my short campaign .... look at my profile. we will be testing new lows on Monday, look for $20/share and sinking next week.
According to S&P, total capital for SYY is nearly $6 billion as of the end of '08, and their earnings for that year were $1.1 billion, so ROC for that year was nearly 18%, which is a very good return.
My point here is that SYY is actually a well managed company that historically has generated good returns. I wouldn't worry too much about temporarily depressed margins unless you feel that managerial competence has taken a dramatic drop for some reason; we are probably nearer the end of this recession than the beginning.
The share repurchase program is burning over 60% of their available cash, then all the costs associated with their astronomically (assinine) number of warehouses and trucks leaves around 2% of profit margin, then some over-zealous buyers made some bad decisions and poof .. 1% profit margin and that's all the cash they have left. Cluster**ck in wikipedia shows Delaney's face.
Most of you are clueless - - there is no excess spoilage, or excess facilities, or stuffing the warehouses with product that isn't being bought. Its just the economy, stupid. Restaurants are suffereing from lack of customers and reduction in spending by those they still have. So they are cutting prices - which means they look to distributors to cut prices... and so forth. That plus the cost of fuel (which would be much higher without so many warehouses near the customer). Amazing how you don't understand the business.
many many and then some more food distributors all compete with Sysco. They are the largest food distributor, but only 20% of the total marketplace. Many competitors = low profit margin. They own their fleet of trucks and diesel fuel is consuming a HUGE portion of their daily cash. Then there are the warehouses, hundreds of them, and they are stuffed full of food that goes bad quickly, and they keep buying more and stuffing them more full daily. That's a lot of cost consuming cash, lots of cash, then 25% of their customers are teetering on bankruptcy = really low profit margin.