McCormick CEO Flags Rising Prices On Global Trade Pressures: ‘Expect To Offset Rising Commodity Costs And Tariffs As Much As We Can’

McCormick & Co. (MKC) CEO Brendan Foley said that due to the dynamic global trade environment, the company’s gross margin was further pressured by rising costs.

“We are absorbing some incremental costs this year, which has a near-term impact on our profitability,” Foley said on a post-earnings call. “We are balancing volume and profitability, and this year, we expect to offset rising commodity costs and tariffs as much as we can.”

McCormick said it now expects annual adjusted profit to be between $3 and $3.05 per share, compared with its previous estimate of $3.03 to $3.08. Shares of the company were down nearly 2% in afternoon trading on Tuesday.

Retail sentiment on McCormick improved to ‘extremely bullish’ from ‘bullish’ territory a day ago, with message volumes at ‘high’ levels, according to data from Stocktwits.

“Consumers, especially low to middle-income households, are adapting to the economic environment by adjusting how they shop, making more frequent trips with fewer items per basket, choosing larger pack sizes to maximize value, and stretching meals across a number of occasions,” said Foley.

He added that consumers continue to cook at home more often and shop mainly for fresh foods to help lower overall meal costs. Foley noted that the food service business, which is reported within the China consumer, has seen softer demand due to slower consumption in certain channels, such as high-end dining.

McCormick’s third-quarter net sales came in at $1.72 billion, compared with Wall Street expectations of $1.71 billion, according to data compiled by Fiscal AI. The company’s adjusted profit was $0.85 per share, compared with estimates of $0.82.

Shares of McCormick have declined by nearly 16% in value over the last 12 months.

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Also See: Constellation Brands Stock Pops 4% As CEO Highlights Rising Consumer Loyalty Amid Market Caution

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