HOUSTON, TX – Sysco Corp. is planning to trim back its workforce by about 2 percent as part of its previously announced three-year plan. News of these layoffs comes on top of an increased income growth target and a proposal to revise its business technology strategy.

The job cuts would affect approximately 1,200 employees in administrative, non-customer-facing roles over the next 15 months. Local marketing associates, as well as delivery and warehouse associates, will not be impacted by this decision.

Sysco said that it 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, according to a press release.

“As part of the three-year plan, we have also reached a very difficult decision to reduce the size of our work force,” said Sysco Chief Executive Bill DeLaney. “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.”

The foodservice giant is continuing to make progress on its three-year plan, noting that it has recently raised its operating income growth target from $400 million to $500 million by the end of fiscal 2018.

Lastly, Sysco said that it will be adding new capability and functionality to its existing SUS Enterprise Resource Planning (ERP) system. The current SAP ERP platform will be removed by the end of fiscal 2017. These enhancements will help achieve a better user experience for its customers and operating companies at a lower cost and with less risk, the company said.

Shares in Sysco were up momentarily after the announcement, increasing approximately 2 percent to $44.12. 

Sysco 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.

“Collectively, these moves will enhance our ability to respond to the ever-changing market landscape, better serve our customers, increase our productivity as an organization, and maximize shareholder returns,” DeLaney concluded.

For the latest developments on Sysco’s three-year plan, stay tuned to AndNowUKnow.

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