US Foods to Cut Jobs Amid Corporate Restructuring
October 21 2016 - 7:33AM
Dow Jones News
By Annie Gasparro
Food distributor US Foods Holding Corp. plans to eliminate
hundreds of jobs as part of a restructuring of its corporate
headquarters near Chicago, according to people familiar with the
company's plans.
The nation's second largest provider of food and other supplies
to restaurants and cafeterias has been looking for ways to reduce
costs after its plan to merge with rival Sysco Corp. was foiled by
antitrust regulators last year.
US Foods, which logs about $23 billion in annual sales and
employs nearly 25,000 people nationally, had expected to reap the
benefits of greater scale and efficiency by combining with Sysco.
Instead, it launched an initial public offering in May, which
earned $1 billion, helping it pay off debt and fund small
acquisitions.
US Foods told employees on Thursday that it plans to cut jobs in
corporate roles like accounting, IT services and human relations
over the next 12 to 18 months.
"This is a continuation of work we did before our IPO...and
something we believe will further support our long-term growth," a
US Foods spokeswoman said.
Over the past year, US Foods has been working to consolidate
back-office jobs that support its 62 distribution centers.
US Foods also this year hired a "vice president of continuing
improvement" whose mandate is to make its distribution facilities
leaner and more efficient.
Sysco, US Foods' larger competitor, announced 1,200 job cuts at
the beginning of the year.
Profit margins in the industry are historically thin, and aside
from Sysco and US Foods, there are hundreds of regional
distributors and specialty, high-end suppliers vying for the
business of independent restaurants.
For the first half of the year, US Foods had an operating profit
margin of 4%, when adjusted to exclude interest, taxes and other
one-time expenses.
Meanwhile, falling food costs are taking a toll on sales at US
Foods and its peers by reducing the value of their inventory,
especially for beef and dairy products.
Write to Annie Gasparro at annie.gasparro@wsj.com
(END) Dow Jones Newswires
October 21, 2016 08:18 ET (12:18 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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