Sysco To Cut 1,200 Jobs; Raises Operating Income Growth Target

(RTTNews) - Sysco Corp. (SYY) said that it plans to reduce its workforce by approximately 2 percent - or 1,200 positions - over the next 15 months. The primary focus of the reduction will be on administrative, non-customer-facing roles. Specifically, local marketing associates as well as delivery and warehouse associates will not be impacted by this action.

Sysco expects to record charges for severance and related benefit costs of $25 million to $30 million over the next 15 months, beginning with the third quarter of fiscal 2016. In addition, the company will incur charges of approximately $70 million in fiscal 2016 and approximately $130 million in fiscal 2017 related to write-offs, accelerated depreciation and conversion costs resulting from the changes in technology strategy.

The company announced additional details of its current three-year plan, including a revised business technology strategy focused on improving the customer experience, a productivity plan to reduce its workforce by approximately 2 percent, and a more aggressive operating income growth target.

"Our improving recent business performance, along with these key steps on technology and productivity, give us the confidence to raise our operating income growth target from $400 million to at least $500 million by the end of fiscal 2018," said Bill DeLaney, Sysco chief executive officer.

Sysco plans to modernize as well as add new capability and functionality to its existing, proven SUS Enterprise Resource Planning (ERP) system that is tailored to the needs of its customers. In conjunction with these steps, Sysco plans to remove the SAP ERP platform currently used by 12 of its operating companies by the end of fiscal 2017. Sysco will continue to use SAP's Ariba, Success Factors, and Business Planning and Consolidation (BPC) solutions.

Sysco expects to realize significant technology cost savings once the conversion to the SUS ERP is completed in fiscal 2017. A portion of these savings will be reinvested in optimizing the company's technology platform to better serve customers.