(Reuters) -McCormick on Tuesday beat expectations for third-quarter sales and profit, aided by resilient demand for its higher-priced spices and seasonings even as macroeconomic uncertainty loomed over consumer spending.
U.S. consumers are shifting away from dining out and increasingly turning to home-cooked meals and meal prep routines, stocking up on pantry staples including McCormick’s Sunshine Seasoning and Brown Butter Finishing Salt.
However, the company lowered its annual profit forecast due to rising commodity costs triggered by global trade uncertainty and tariffs.
It now expects annual adjusted earnings per share to be in the range of $3 to $3.05, compared with its prior forecast of $3.03 to $3.08.
While the Cholula hot sauce maker’s expansion efforts, including the recent move of raising its stake in a Mexico joint venture, have boosted its global presence, they have also exposed it to higher tariff risks.
“Amid rising inflation from higher commodity costs and tariffs, we continue to invest in our growth plans, supported by our cost savings initiatives, which strengthen our resilience and differentiated fundamentals,” CEO Brendan Foley said in a statement.
Shares of the company were marginally down at $68.12 in volatile premarket trading. The stock has fallen about 10% this year.
Apart from higher input costs, the company’s margins came under pressure from expenses related to brand marketing and technology investments.
Its third-quarter gross profit margin contracted 130 basis points after expanding 170 basis points a year ago.
Conagra Brands also beat quarterly expectations, and flagged margin pressures as earlier trade and tariff benefits fade.
For the quarter ended August 31, McCormick posted net sales of $1.72 billion, compared with analysts’ estimates of $1.71 billion, according to data compiled by LSEG.
Its adjusted profit per share of 85 cents topped estimates of 82 cents.
(Reporting by Sanskriti Shekhar and Anuja Bharat Mistry in Bengaluru; Editing by Maju Samuel)
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