Performance Food Group shares fall on weak outlook

Shares of Performance Food Group (NYSE: PFGC) fell on Friday after the food distributor revised its full-year guidance downward, citing softer demand and margin pressures.

The Richmond, Virginia-based company said it now expects net sales growth of 2% to 3% for the fiscal year ending June 30, down from its prior forecast of 3% to 5%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) are projected to decline by 1% to 3%, compared with an earlier estimate of a 1% to 3% increase.

Performance Food Group attributed the downgrade to weaker-than-expected demand across its segments, including broadline and specialty, as well as ongoing cost pressures. The company also noted that inflationary pressures on labor and transportation costs have weighed on profitability.

The revised guidance follows the company’s fiscal third-quarter earnings report, released on May 7, which missed analyst expectations. For the quarter ended March 31, net sales rose 3.1% year-over-year to $6.7 billion, while adjusted EBITDA fell 2.3% to $293 million.

Analysts at Stifel trimmed their price target on PFGC to $65 from $70, maintaining a hold rating on the stock. The company’s shares were down 4.2% at $58.70 in midday trading, underperforming the S&P 500’s 0.3% gain.

Performance Food Group has been navigating a challenging operating environment marked by elevated costs and shifting consumer demand. The company serves over 200,000 customers, including restaurants, healthcare facilities and educational institutions, across the U.S.

Investors will monitor the company’s ability to stabilize margins and restore growth as it enters the final quarter of its fiscal year.