Sysco Commits to 2.5% Local Volume Growth at CAGNY 2026, Reiterates Full-Year Guidance
February 17, 2026 · by Fintool Agent
Sysco Corporation delivered an upbeat message to investors at the Consumer Analyst Group of New York (CAGNY) 2026 Conference, reiterating full-year guidance and committing to accelerate local volume growth to at least 2.5% in the second half of fiscal 2026—a meaningful step-up from the 1.2% growth posted in Q2.
The $81 billion food distribution giant, which serves approximately 730,000 customer locations worldwide, is betting that improved sales force retention, AI-powered selling tools, and a December tuck-in acquisition will drive the acceleration—regardless of what happens in the broader restaurant macro environment.
"We are not assuming any improvement in the end macro market to be able to deliver this improvement," CEO Kevin Hourican told the audience. "The improvement is from initiatives that are directly within our control."
Ask Fintool AI AgentGuidance Reiterated Amid Restaurant Softness
Sysco officially reiterated its FY2026 guidance at CAGNY:
| Metric | FY2026 Guidance |
|---|---|
| Sales Growth | 3-5% |
| Adjusted EPS Growth | High end of 1-3% |
| Normalized EPS Growth* | 5-7% |
*Adjusted for management incentive carryover
CFO Kenny Cheung emphasized that the company is on track for "another record year" in fiscal 2026, following four consecutive years of strong financial performance. Since 2022, Sysco has delivered a 5% revenue CAGR and approximately 9% bottom-line CAGR.
The stock closed at $89.70 on Monday, down 0.9% on the day but still up nearly 7% year-to-date and trading near its 52-week high of $91.76. Shares had surged 6.3% on January 27 following the Q2 FY2026 earnings report, which beat estimates and included management's initial commitment to accelerate local growth.
The Local Business Inflection Story
The centerpiece of Sysco's CAGNY presentation was the turnaround in its high-margin local restaurant business—the segment that had been a source of investor frustration over the past year.
In Q2 FY2026, Sysco posted +1.2% local volume growth—a 140 basis point improvement from the prior quarter—while restaurant traffic (as measured by foot traffic) decelerated by 200 basis points.
The 2.5%+ target for H2 FY2026 breaks down as:
- 100+ bps organic improvement from sales initiatives
- ~50 bps contribution from a tuck-in acquisition completed in December
What's Driving the Improvement?
Management pointed to several Sysco-specific levers:
- Improved colleague retention - Sales consultant turnover has normalized after a difficult period
- AI 360 selling tool - Gives sales reps prompted, personalized selling suggestions for each customer visit
- Sysco Your Way - Flexible delivery and ordering program driving customer stickiness
- Total Team Selling - Coordinated approach across broadline and specialty sales
- Perks loyalty program - Driving engagement with top customers
"By giving them suggested prompted leads, their close rate goes up, their confidence in their selling goes up. They make more money, which is a self-reinforcing loop," Hourican explained.
January Strong, Valentine's Week Delivered
Asked about recent trends, Hourican provided color on January and February performance:
"January was a very strong month for Sysco on a year-over-year basis... First two weeks of February were rough [due to winter weather]... What's important to note, last week, which was clean from a year-over-year perspective, again, very strong. Valentine's is the second biggest restaurant day of the year. Mother's Day is the first. It was a really good strong week for us."
Ask Fintool AI AgentInternational: 9 Quarters of Double-Digit Profit Growth
While the local U.S. business grabbed headlines, Sysco's international segment has quietly become a major growth engine, delivering nine consecutive quarters of double-digit profit growth.
Management doubled the international segment's profit rate in just three years, and Hourican stated there is "absolutely no false ceiling" to international profitability—targeting eventual parity with the company total.
The playbook driving international success:
| Initiative | Impact |
|---|---|
| Distribution network expansion | Broader geographic coverage in Europe |
| Sysco Brand deployment | Good/better/best pricing architecture globally |
| Technology suite rollout | Modern WMS, routing tools, CRM |
| Best practices sharing | Sysco Your Way, Perks loyalty program |
Sysco operates physical distribution facilities in 10 countries and does business in 80 additional countries through its export operation. International markets are "about 10 years behind the U.S." in the food-away-from-home trend, providing a structural tailwind.
Value Tier Gap: A New Opportunity
In a notable disclosure, Hourican acknowledged a gap in Sysco's product assortment at the value tier—products typically below its "better/best" premium positioning.
"This is not about lowering our selling prices on existing products. This is about bringing products into our assortment that we do not currently carry, and they're not buying the category from Sysco," he clarified. "This is not trade down... this is incremental cases on our truck, and we can sell these products profitably."
The initiative involves identifying and certifying new suppliers to Sysco's standards—a "slower burn process" expected to unfold over approximately the next year.
Field Merchandising: Acknowledging a Misstep
In a candid moment, Hourican admitted that in strengthening Sysco's centralized merchandising function, the company "by accident" reduced the effectiveness of its local field merchandising organization.
The issue manifests in two ways:
- Supply disruption response - When a national preferred supplier has inventory issues, local teams need to quickly source alternatives—a capability that weakened
- Local sourcing optimization - Sometimes buying locally makes more economic sense than shipping from distant national suppliers
"We've strengthened the left [centralized strategy], we need to get the strength back on the right [local flexibility]," Hourican said. "It's going to make a difference in our ability to profitably grow our market share."
Long-Term Algorithm and Capital Returns
CFO Kenny Cheung outlined Sysco's long-term financial framework:
| Long-Term Target | Range |
|---|---|
| Net Sales Growth | 4-6% |
| Adjusted EPS Growth | 6-8% |
| Total Shareholder Return | 9-11% |
| Dividend Yield | 2.5% |
The company expects to return approximately $2 billion to shareholders in FY2026—$1 billion in dividends and $1 billion in share repurchases. Sysco began its $1 billion buyback program in Q3 FY2026.
Since 2015, Sysco has cumulatively returned approximately $21.5 billion to shareholders via dividends and buybacks—more than half of its current ~$43 billion market cap.
The company maintains its status as a Dividend Aristocrat, having grown dividends for 56 consecutive years. While the board ultimately decides, Cheung said "continued dividend growth is fair and reasonable" given the company's historical cadence of April dividend increases.
Ask Fintool AI AgentIndustry-Leading Position
Management emphasized Sysco's structural advantages versus peers Us Foods and Performance Food Group:
| Metric | Sysco vs. Peers |
|---|---|
| Gross Margin | 1.3x higher than average core peer |
| Operating Margin | 1.4x higher than average core peer |
| Free Cash Flow | 2x higher than average core peer |
| ROIC | 400 bps above consumer staples average; 2x core peers |
Sysco is the only investment-grade rated company in the food distribution space, providing flexibility to "weather any instability or storm" while continuing to invest and return capital.
Recent Financial Performance
| Metric | Q3 2024 | Q4 2024 | Q1 2025 | Q2 2025 | Q3 2025 | Q4 2025 | Q1 2026 | Q2 2026 |
|---|---|---|---|---|---|---|---|---|
| Revenue ($B) | $19.4 | $20.6 | $20.5 | $20.2 | $19.6 | $21.1 | $21.1 | $20.8 |
| Diluted EPS | $0.85 | $1.23 | $0.99 | $0.82 | $0.82 | $1.09 | $0.99 | $0.81 |
| Gross Margin | 18.6% | 18.7% | 18.3% | 18.1% | 18.3% | 18.9% | 18.4% | 18.3% |
Forward consensus estimates point to continued growth:*
| Fiscal Year | Revenue Estimate | EPS Estimate |
|---|---|---|
| FY 2026 | $84.4B | $4.59 |
| FY 2027 | $88.7B | $5.09 |
*Values retrieved from S&P Global
What to Watch
- H2 FY2026 local volume - The 2.5%+ target is now the benchmark; Q3 earnings (late April) will provide the first read
- International margin expansion - Can the segment continue marching toward company-total profitability?
- Value tier product rollout - New supplier certifications over the coming year
- April dividend announcement - Market expects continuation of 56-year growth streak
- Restaurant traffic trends - Sysco is outperforming the industry, but macro weakness could pressure overall growth
The Bottom Line
Sysco's CAGNY presentation was a confidence-building exercise for a company executing through a challenging restaurant environment. The local business inflection—from flat to 2.5%+ growth—is the key narrative, supported by Sysco-specific initiatives rather than reliance on macro improvement.
With industry-leading margins, a fortress balance sheet, and a commitment to return $2 billion to shareholders this year, management framed Sysco as a compelling opportunity "whether you are a value investor, an income investor, or a growth investor."
The stock's 7% YTD gain and proximity to 52-week highs suggests the market is starting to believe it.
Related Companies: Sysco Corporation · Us Foods Holding Corp. · Performance Food Group
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