Performance Food Group believes it is very well positioned in the large & growing food away-from-home market with exposure across nearly all channels & product offerings. Management reported that the consumer remains resilient despite multiple years of above-average inflation, with PFG able to evolve & grow in a stable market.
Wholesale Foodservice Price Outlook
- -2.3% deflation during fiscal 1QFY24 is expected to extend as mild deflation next quarter, moving towards flat at the beginning of fiscal 3Q24 & finishing the fiscal year at a healthy low-single-digit inflation rate.
- According to management, inflation is the company’s friend, but not when it gets too high.
PFG’s Sales Performance
- +1.5% y/y net sales growth during the quarter was driven by a +2.6% increase in total case volume growth, including +7.6% growth in its high-margin independent restaurant channel (helped by +7.5% new account wins) offset by a modest decline in its selling price per Foodservice case (reflecting the -2.3% deflation rate).
- A +15% y/y sales increase for its high-margin Vistar (candy & snacks) segment was partially driven by the strong performance of the Oppenheimer & Barbie movies. After a brief sales lull, there was a nice pickup driven by the Taylor Swift movie.
- A +58% y/y increase in Corporate segment sales partially reflects a new employer practice of providing free candy, snacks, & beverages to incentivize employees to return to the office.
- Sales slowed in August & again in September and 2QFY24 net sales are expected to decline to $14.0B to $14.3B down from $14.9B during fiscal 1Q24, reflecting an expectation for further deflation & lowercase prices.
- A +13% increase in its fiscal 1Q24 operating profit was primarily driven by growth in high-margin independent restaurant case growth.