Sysco Plans To Launch New Product Range To Boost Revenues

Sysco Corporation (NYSE:SYY) recently announced that it will be introducing seven products this month, that include cheesecakes, juice concentrates, organic chicken and shrimp amongst others. These products are designed to suit the health and wellness of consumers as well as save labor.

The products are set to be launched under the company’s Cutting Edge Solutions platform, designed to aid Sysco in constantly innovating new products, backed by extensive research on consumer tastes and preferences. The products developed under this initiative focus on using natural ingredients and plant-based proteins. The next launch under this platform is targeted to be in early 2018.

Sysco has always been focusing on expanding its top line through new product developments and innovation, thereby creating a strong product portfolio across a wide array of business segments. Such initiatives aid the company to remain competitive and evolve itself, amid changing industry environment and consumer preferences. Further, the company’s focus on value-added services and improved e-commerce capabilities has enabled growth with local customers.

Other Growth Drivers

In addition to new product launches, Sysco has also been carrying out various acquisitions over the years to expand distribution network, customer base and boost long-term growth. Sysco’s acquisition of London-based, Brakes Group, in July 2016 has benefited the company significantly during fiscal 2017 and is expected to generate sales of approximately $55 billion annually. Other noteworthy acquisitions of Sysco include Supplies on the Fly, North Star Seafood, Pacific Star Foodservice, Tannis Trading and Gilchrist & Soames that have aided improving its market share.

In an effort to improve margins, Sysco has been undertaking process improvement initiatives, particularly in its warehouse operations and supply chain area. The company achieved $417 million operating income growth since fiscal 2015. It remains on track to achieve the high end of the three-year adjusted operating income growth target of approximately $600 million to $650 million by the end of fiscal 2018. Improving gross margin is another key driver of Sysco achieving its three-year targets.

Notably, the food/grocery business is witnessing stiff competition and aggressive promotional environment. Amid such a scenario, Sysco’s efforts to remain competitive through new product development, acquisitions and to reduce operating expenses in order to drive margins are quite noteworthy and have been yielding results. Evidently, shares of this leading distributor of food products have gained 9.8% over the past one year, outperforming the industry’s decline of 7.4%. Further, the company carries a VGM Score of A and has a long-term growth rate of 8.4%.

Sysco currently carries a Zacks Rank #3 (Hold).

Looking for More? Check These Consumer Staples Stocks

Investors may also consider stocks such as Estee Lauder Companies Inc. (NYSE:EL) , flaunting a Zacks Rank #1 (Strong Buy), while Nu Skin Enterprises Inc. (NYSE:NUS) and Constellation Brands Inc. (NYSE:STZ) , carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks Rank #1 stocks here.

Estee Lauder delivered an average positive earnings surprise of 13.7% in the trailing four quarters. It has a long-term earnings growth rate of 12.2%.

Nu Skin delivered an average positive earnings surprise of 10.8% in the trailing four quarters. It has a long-term earnings growth rate of 8.7%.

Constellation Brands delivered an average positive earnings surprise of 11.7% in the trailing four quarters. It has a long-term earnings growth rate of 18.2%.

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