Is Sysco's International Business Becoming a Key Growth Driver?

Sysco Corporation’s SYY international business is emerging as a more meaningful contributor to the company’s overall performance, supported by steady execution and improving fundamentals. The segment is gaining traction as a structurally stronger growth engine, offering both sales momentum and improving profitability across regions.

A notable strength within the international business has been the continued shift toward local customers. In the first quarter of fiscal 2026, international local case volume grew approximately 5%, highlighting solid engagement in markets where Sysco continues to deepen relationships with independent operators. This mix is particularly important as local customers typically carry more attractive economics and tend to be less volatile than larger national accounts, supporting steadier performance over time.

Margin expansion has been another defining feature of the segment’s progress. International gross margin increased by 43 basis points to 20.8%, reflecting disciplined pricing, strategic sourcing and improved supply-chain execution. Management emphasized that these gains were achieved while continuing to invest in the business, underscoring the scalability of Sysco’s operating model outside the United States.

Profit growth trends further reinforce the importance of the international segment. Adjusted operating income increased 13.1%, marking the eighth straight quarter of double-digit profit growth. Operational consistency across geographies has played a key role in this performance. Every major international region contributed to growth, supported by higher service levels, reduced product shrink and better productivity across the supply chain. 

Overall, Sysco’s international business appears to be evolving from a supporting segment into a more durable growth driver. With improving margins, consistent profit growth and broad-based regional execution, the segment is increasingly strengthening the Zacks Rank #3 (Hold) company’s diversification and reinforcing the quality of its long-term earnings profile.

Shares of SYY have plunged 4.1% in the past six months compared with the industry’s decline of 12.8%.

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This article originally published on Zacks Investment Research (zacks.com).

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