Sysco to lay off some finance employees in early 2019

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a large truck on a city street: Sysco focused on growing its global operations in 2016.© Sysco / Sysco
Sysco focused on growing its global operations in 2016.

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

a box truck that is parked on the side of a road: Sysco trucks at Sysco Houston at 10710 Greens Crossing Blvd., Monday, June 25, 2018, in Houston.   ( Karen Warren  / Houston Chronicle )© Karen Warren, Staff / Houston Chronicle
Sysco trucks at Sysco Houston at 10710 Greens Crossing Blvd., Monday, June 25, 2018, in Houston. ( Karen Warren / Houston Chronicle )

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.

a box truck that is parked on the side of a road: Sysco trucks at Sysco Houston at 10710 Greens Crossing Blvd., Monday, June 25, 2018, in Houston.   ( Karen Warren  / Houston Chronicle )© Karen Warren, Staff / Houston Chronicle
Sysco trucks at Sysco Houston at 10710 Greens Crossing Blvd., Monday, June 25, 2018, in Houston. ( Karen Warren / Houston Chronicle )

“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 man standing in front of a computer: Specialist John McNierney works at the post that handles Sysco, on the floor of the New York Stock Exchange, Monday, June 29, 2015. Sysco said it scrapped a proposed $3.5 billion buyout of US Foods after the Federal Trade Commission blocked the deal to combine the two food-service companies.  (AP Photo/Richard Drew)© Richard Drew, STF / Associated Press
Specialist John McNierney works at the post that handles Sysco, on the floor of the New York Stock Exchange, Monday, June 29, 2015. Sysco said it scrapped a proposed $3.5 billion buyout of US Foods after the Federal Trade Commission blocked the deal to combine the two food-service companies. (AP Photo/Richard Drew)

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

RELATED: Sysco shares slide as transportation costs rumble higher

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.

On HoustonChronicle.com: Truck driver shortage constrains booming Texas oil fields, U.S. economy

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 $65.94 as of close of business Thursday.

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 the most recent fiscal year that ended June 30.

2018-12-07 03:00:00

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