Spice maker McCormick misses quarterly profit estimates on higher expenses

McCormick spices are displayed on March 28, 2023 in San Anselmo, California. (Justin Sullivan/Getty Images)

McCormick missed first-quarter profit estimates on Tuesday, as higher promotional expenses and price cuts for its spices, sauces and seasonings fell short of boosting demand.

Shares of Hunt Valley, Maryland-based company were down about 3% in premarket trading.

McCormick, like its peer General Mills, has been cutting prices and ramping up brand marketing and promotional investments to bring back lost customers.

But expectations of inflation due to U.S. President Donald Trump’s import tariffs and subsequent trade war have made consumers more cautious about purchasing branded items, even in essential categories such as packaged food.

Quarterly volumes in McCormick’s consumer segment, a major revenue contributor, rose only 2.6% from a year ago, although the prices were down 1.4% compared with a 3% increase the previous year.

McCormick reported adjusted profit of 60 cents per share for the first quarter, compared with analysts' estimates of 64 cents per share, according to data compiled by LSEG.

For the quarter, its net sales of US$1.61 billion came in line with analysts' estimates.

The Cholula hot sauce maker said it has maintained its annual forecasts, reflecting plans to offset costs related to the U.S. import tariffs on China with targeted price cuts and other cost savings efforts.

The outlook does not include additional impact from tariff actions in 2025 due to uncertainty regarding their implementation, the company said in a statement.

Among peers, Kraft Heinz forecast weak profit after consecutive declines in quarterly sales, while International Flavors & Fragrances saw steady improvement to demand and volume.

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Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Sahal Muhammed.