New York, January 22, 2026, 15:03 ET — Regular session
- McCormick shares dropped roughly 8% following Q4 results and a 2026 profit forecast that missed expectations
- Company cites tariffs, commodity costs, and investment spending as pressures on margins
- Investors wrestle with robust sales growth forecasts amid a narrow earnings outlook
Shares of McCormick & Co dropped 7.9% to $61.27 in Thursday’s afternoon session, following the company’s warning about rising tariff and commodity expenses. The spice maker also issued a 2026 profit forecast that came in under Wall Street’s estimates.
This move is significant since McCormick, a key player in staples with heavy exposure to pantry goods, is still grappling with cost pressures from trade policies and raw materials, with no sign of relief. CEO Brendan Foley told analysts, “Approximately 50% of the incremental tariffs on McCormick items remain in place,” estimating the tariff impact at around $50 million for fiscal 2026. Deutsche Bank’s Steve Powers warned the stock might face near-term pressure despite solid sales trends. (Reuters)
Investors face a familiar dilemma, now with a twist: solid top-line growth, yet rising costs. If tariffs persist or grow, spices and herbs offer few straightforward alternatives.
McCormick reported adjusted earnings per share of 86 cents for the fourth quarter, excluding certain one-time items to improve comparability, on net sales around $1.85 billion. The company projected fiscal 2026 adjusted EPS between $3.05 and $3.13, with net sales expected to rise 13% to 17%. It also noted that “global trade dynamics continue to create headwinds.” (SEC)
Here’s the tension in the outlook: the company forecasts sales growth outpacing earnings growth. That dynamic tends to shift focus onto pricing power and how quickly cost savings roll in, rather than just the top-line revenue figure.
Management highlighted several factors driving the margin squeeze: rising commodity prices, tariffs, and increased spending on capacity and brand marketing. The company reported a decline in gross margin compared to the prior year, framing the change in “basis points”—a term meaning one-hundredth of a percentage point—commonly used to measure small shifts in margins.
During the quarter, McCormick’s consumer segment saw modest volume growth alongside price hikes, whereas its flavor solutions unit experienced smaller gains and some volume weakness. Investors are watching that divide closely as a test of whether pricing can outpace costs without hurting demand.
The broader market showed little volatility. The S&P 500 tracker SPY gained roughly 0.6%, while the consumer staples ETF XLP hovered near flat. That left McCormick standing out as a notable laggard. Meanwhile, packaged-food rivals Kraft Heinz, General Mills, and Conagra all pushed higher.
McCormick revealed board updates this week, naming Rick Dierker from Church & Dwight and ex-Molson Coors CEO Gavin Hattersley as directors starting Feb. 1. “We are delighted to welcome Gavin and Rick to McCormick’s Board,” Foley said in the statement. (SEC)
However, the stock is driven by margins, not governance. The risk is clear-cut: tariffs drag on past management’s forecast, commodity prices stay elevated, or consumers resist price increases more than anticipated, leaving McCormick to shoulder more inflation pressure.
Investors will now watch for signs that pricing moves and productivity efforts can quickly counter the tariff impact to shore up margins. A separate filing reveals the company’s annual meeting is set for April 1, 2026, where two directors are expected to step down. (SEC)
