Investing.com -- Sysco Corporation (N:SYY) announced on Monday plans to lay off 1,200 positions, as part of a three-year plan aimed at raising its operating income growth target to at least $500 million by the end of fiscal year 2018.
Sysco, a Houston-based multinational food distributor, is the largest the non-oil company in the city and the third-largest non-oil related company in the state of Texas, behind AT&T Inc (N:T) and Dell. The bulk of the layoffs, which comprise approximately 2% of its total workforce, will be in administrative, non-customer facing roles, the company said in a statement. More specifically, the company noted that local marketing associates, along with drivers and warehouse employees will not be affected the initiative. The company expects to reduce its work staff gradually over the next 15 months.
"As part of the three-year plan, we have reached a very difficult decision to reduce the size of our work force,” Sysco CEO Bill DeLaney said in a statement. “We take seriously any decision that impacts our associates, but this is an essential step toward becoming a more efficient organization. This action will position us to compete more effectively in the markets we serve, while continuing to invest in our business, grow our dividend, make strategic acquisitions and opportunistically repurchase shares.”
Last week, Sysco acquired North Star Seafood, a Florida-based seafood distributor with approximately $128 million in annual sales, according to the company. North Star is regarded for distributing high-quality fresh and frozen seafood to local, whole, cruise and retail customers throughout the state. Terms of the deal were not disclosed. It came three days after Sysco agreed to terms to acquire Brakes Group, a European food service distributor in a deal worth approximately $3.1 billion. As part of the deal, Sysco will assume approximately $2.3 billion of the European distributor's debt.
DeLaney is looking to retool the company after its $8.2 billion acquisition of chief rivals U.S. Foods collapsed last summer, amid significant antitrust concerns. Days earlier, a federal judge granted the U.S. Federal Trade Commission an injunction on grounds that the merger would lead to excessive prices for restaurants, hotels and other venues that rely heavily on food distributors. Sysco initially purchased US Foods from private equity firm KKR & Company for $3.5 billion in December, 2013.
Shares in Sysco were unchanged in after-hours, after closing the regular session at 44.13, up 2%.