French catering and food services company Sodexo dramatically lowered its financial projections for 2026 on Friday, acknowledging significant operational challenges that have plagued the business for years. The announcement triggered a sharp 13% drop in the company’s stock price.
The food service giant now anticipates organic revenue growth of just 0.5% to 1% this year, a steep reduction from its previous forecast of 1.5% to 2.5%. The company also expects its underlying operating margin to fall significantly to between 3.2% and 3.4%, much lower than earlier projections of a slight decline from last year’s 4.7%.
Jefferies analysts warned in their initial assessment of the half-year report that “shares should react negatively given a bigger-than-expected earnings reset and deteriorating commercial performance in H1.”
The company’s stock has plummeted approximately 40% over the past two years, significantly trailing behind major competitors Compass and Aramark. New Chief Executive Officer Thierry Delaporte directly addressed this poor performance during media briefings.
“We have consistently underperformed compared to the market and our competitors,” Delaporte stated to reporters. “The causes are deep-rooted and long-standing.”
Delaporte, who took over from Sophie Bellon in November, identified several critical problems within the organization. He said Sodexo had failed to invest adequately in essential skills and struggled with inconsistent performance and forecasting.
The new CEO also highlighted problems with commercial intensity, priority management, and an overly complex decision-making framework, all areas he plans to reform.
Financial analyst Yi Zhong from AlphaValue predicted that Sodexo will need to boost capital expenditures to compete with industry peers, potentially requiring reduced dividend payments.
The company’s struggles are particularly pronounced in North America, where revenue declined 3.7% to 12.02 billion euros ($14.05 billion) during the first half of its fiscal year. Currency conversion effects and continued weakness in the North American market contributed to results falling approximately 60 million euros short of analyst expectations.
Morningstar analyst Ben Slupecki suggested that increased competition from Aramark may be contributing to Sodexo’s difficulties in U.S. markets.
“Sodexo has failed to adjust, has been caught flat-footed, and has seen net new deceleration into losses in the first half of the year,” Slupecki explained to Reuters.
