McCormick beat market forecasts for first-quarter sales and earnings on Tuesday. The strong consumer demand for its premium spices and seasonings, despite persistent inflation, boosted its shares by almost 9%.
Demand for McCormick’s hot sauces and other condiments stayed consistent as the company ramped up promotions and implemented strategies to reduce price differences between its branded products and private label items, thereby slowing the rate of volume decline.
The company’s volumes for the quarter decreased by 1%, following a 3% decline in the previous quarter, while its prices increased by 3%, compared to a 5% rise in the previous quarter.
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McCormick anticipates that volume trends will continue to improve as the year advances, with CEO Brendan Foley noting during a post-earnings conference call that this will drive volume growth in the second half of the year.
In contrast to Kraft Heinz and International Flavours & Fragrances, which had seen volume decreases as a result of aggressive price increases in prior quarters, the manufacturer of Cholula hot sauce reported higher sales in the first quarter.
The company reported net sales of $1.60 billion, surpassing analysts’ average estimate of $1.56 billion, as per LSEG data.
The company’s cost-cutting measures and pricing tactics helped the gross profit margin for the quarter rise by 140 basis points to 37.4% from the same period the previous year.
McCormick, a supplier to major retailers such as Walmart, reported adjusted earnings per share of 63 cents for the quarter ended Feb. 29, surpassing analysts’ average estimate of 58 cents per share.
The Hunt Valley, Maryland-based company, which also reaffirmed its annual forecast, was poised for its strongest session in a year.
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