Shares of McCormick & Company (NYSE: MKC) were down 1.8% on Thursday despite the company reporting better-than-expected earnings results for the third quarter of 2021. The stock has dropped 14% thus far this year and 14% over the past 12 months.
In Q3 2021, net sales increased 8% year-over-year to $1.55 billion. Sales from the Cholula and FONA acquisitions contributed 4% to the top line growth. Sales in the Consumer segment grew 1% while Flavor Solutions segment sales rose 21% versus the year-ago quarter. Higher sales drove a 5% growth in adjusted EPS to $0.80. Both the top and bottom line numbers surpassed market expectations.
During the quarter, the company continued to see demand for at-home food consumption as customers chose to stick to their pattern of cooking more meals at home, a trend which had gained traction during the pandemic. McCormick expects this trend to continue beyond the pandemic as people prefer more home-cooked and healthy options and believes this will help drive sales growth going forward.
The company faced tough comparisons as the year-ago period included the pandemic-driven surge in demand. Its total US branded portfolio consumption declined 10% in Q3 compared to a 31% consumption increase in the same period in 2020.
Consumption growth was 19% compared to Q3 2019 and this was led by double-digit growth in spices and seasonings, hot sauces and barbecue sauce. Household penetration and repeat rates have grown versus 2019 and the company is seeing customers purchase more of its products than they were pre-pandemic.
McCormick is also seeing a recovery in the foodservice industry which helped drive sales in the Flavour Solutions segment. The company expects this recovery to continue over the coming months and believes this will help drive growth.
Like its peers, McCormick is facing cost pressures. In Q3, higher inflation and industry-wide logistics challenges took a toll on profit. The company plans on tackling inflation through pricing and other strategies.
McCormick raised its sales guidance for fiscal year 2021 but pared its outlook for adjusted EPS. The company now expects sales to grow 12-13% versus FY2020. The earlier projection was for a growth of 11-13%. Adjusted EPS is now expected to range between $2.97-3.02 versus the previous outlook of $3.00-3.05. The decrease was driven by revisions to adjusted operating income that reflect higher inflation and logistics challenges.
Looking for more insights on the earnings results? Click here to access the full transcripts of the latest earnings conference calls!
For technology stocks, 2022 has been a challenging year, with companies losing significant market value amid prolonged stock selloff. In that respect, Salesforce, Inc. (NYSE: CRM) is among the worst-affected
Shares of Macy’s Inc. (NYSE: M) were down on Thursday. The stock has gained 36% over the past three months and 18% over the past one month. The company’s sales
Department store chain The Kroger Co. (NYSE: KR) on Thursday said its third-quarter sales and adjusted earnings increased year-over-year. The latest numbers also exceeded the market's expectations. Net earnings attributable to