The pandemic created havoc for many businesses. However, essentials like food, defense, and pharmaceuticals were considered to be relatively safe sectors amid the volatility. However, food distributors were not immune from the COVID shocks. Since restaurants account for an important part of the client profile for food distributors, shutdowns affected the hospitality and restaurant sector, which in turn affected food distributors like Sysco Corporation.
More About Sysco Corporation
Sysco Corporation was founded in the year 1969 and is based in Houston, Texas. Sysco is actually an acronym for Systems and Services Company. The firm is the world’s largest broadline food distributor. The food distribution industry is very fragmented and in such a scenario, Sysco Corporation holds an enviable 16% market share. Sysco Corporation distributes more than 400,000 products to restaurants, healthcare facilities, travel and leisure establishments, retail businesses, education and government buildings, and other clients. Restaurants account for over 60% of the company’s revenues and are by far the biggest segment for Sysco. Healthcare facilities come second with close to 9% of revenues while the travel and leisure segment account for 7% of revenues. Geographically, Sysco has very much of a US-centric operation. Over 80% of revenues come from the US, about 8% come from Canada, 5% from the UK, while the rest are split among other regions of Europe and the world.
Sysco Corporation’s stock closed at $75 on 22nd January 2021. The stock was trading at a 2.39% dividend yield at the time. Sysco had gained more than 3% over the preceding month and the stock was up 140% since the March 2020 market crash. The performance since March 2020 is actually better than the 5-year performance – a growth of 88% since January 2016. Another food distributor US Foods Holding Corp has also seen its stock rise 4% over the last month. That stock is up 186% since the March 2020 market fall.