“This has really become a trend that is becoming a habit,” Kurzius said in an interview on CNBCs Tuesday “Bad money.”
The spice maker’s shares fell 2.7% to $ 189.89 apiece on Tuesday, according to the company Profit report before the bell. McCormick reported sales of $ 1.43 billion, beating Wall Street’s expectations of $ 1.39 billion. Earnings per share were $ 1.53, slightly above what analysts had expected of $ 1.52.
Sales in the third quarter increased by 8% compared to the same period last year. This reflects the increase of 8% compared to the previous year reported for the second quarter, which ended May 31 and included the first wave of home stay orders to hit the United States.
In Tuesday’s earnings release, McCormick reported that consumer segment sales rose 15% as economic pandemic restrictions were eased in the US and other parts of the world. In the second quarter, the maker of Old Bay Seasoning, French Mustard, and Frank’s Red Hot saw sales grow 26%.
Kurzius, who has held various roles with McCormick since joining in 2003, said he saw additional encouraging signs.
“Our household penetration is up 8%. That’s millions of households, and the repetition rate has increased by 7%. That means consumers are using our products and asking for more,” he told CNBC Jim Cramer. “We have gained market share in most of our categories, and this is not just a US phenomenon. It is happening all over the world. It will be a long-term growth driver.”
As evidence, Kurzius pointed to China, which he believes is the company’s largest market outside of the United States. He stated that China, where the coronavirus first emerged late last year, was at least “several months” ahead of America on its timeline of pandemic recovery. “Still, we see continued consumer demand in China as well,” he said.
The food service industry was hit hard during the pandemic, and state and local governments have put various restrictions on its operations to help slow the spread of Covid-19. McCormick has exposure to the industry through its Flavor Solutions segment, which posted a 3% drop in sales for the third quarter compared to the same period last year.
Even so, Kurzius said this represented “a strong recovery” from the declines seen earlier in the pandemic. In the second quarter, when many restaurants may have closed or opened only for takeout or delivery, McCormick food solutions sales fell 18% year over year.
“Fast food restaurants, which are based on takeaways and drive through and eat out, in contrast to dinner, have really recovered very well,” said Kurzius. “Our quick service customers are growing and recovering in some parts of the world.”
On the other hand, Kurzius said that “white tablecloths” and other individual restaurants in places with economic constraints are “facing a difficult path”.
At the close of trading on Tuesday, McCormick shares were down nearly 10% from their September 3 high of $ 211.07. Overall, though, it’s been a tough month for Wall Street, and McCormick’s shares have risen more than 60% since the coronavirus-era bottomed out in late March.
On Tuesday, the Baltimore-based company announced a 2-for-1 stock split, the first since April 2002. McCormick expects its stock to trade on December 1 on a split-adjusted basis.