HUNT VALLEY, MD. — McCormick & Co. will make a “significant” increase in brand marketing for the fall and holiday season, said Lawrence E. Kurzius, president and chief executive officer.
“Our marketing spend is deliberately skewed to the second half of the year,” he said in a June 27 earnings call to discuss second-quarter results. “Our new product launches in the first half, we get the benefit of that in the second half. We have more new products that we’re launching in the second half of the year as well.”
New products set to debut in the second half of the fiscal year include street food seasonings following a successful launch in the United Kingdom, complete meal seasonings, a package of complementary seasonings for protein, vegetables and starch, and Thai Kitchen coconut milk in a resealable tetra package.
Hunt Valley-based McCormick & Co. in the second quarter ended May 31 posted net income of $149.4 million, equal to $1.13 per share on the common stock, which was up 21% from $123.3 million, or 94c per share, in the previous year’s second quarter. Despite a 3% unfavorable impact from currency, net sales of $1,301.9 million were slightly above $1,301.3 million in the previous year’s second quarter
In the company’s Consumer segment, net sales dipped 1% to $764.1 million in the second quarter after a 3% unfavorable impact from currency. The company posted higher volume and product mix in the Zatarain’s frozen portfolio, Frank’s RedHot sauces, branded extracts and branded Hispanic products. A late Easter (April 21) and a shorter grilling season in the quarter led to a slowdown in the spices and seasonings category. Mr. Kurzius also pointed to the wet spring.
“The late grilling season, that compression of the grilling season, and some unfavorable weather was a headwind to our Grill Mates range,” he said.
McCormick & Co. planned internally for the late Easter, he said.
“Everyone (knew) when Easter was going to hit,” Mr. Kurzius said. “We’ve moved some advertising into the third quarter. You’re going to see a nice up spend in the third quarter, which we hope will continue to drive good consumption.”
During the earnings call Mr. Kurzius answered a question about whether the strong U.S. economy may lead to more restaurant traffic and less cooking at home.
“I think that this cooking-at-home trend is more a characteristic of the millennial generation and is not being driven by economic factors,” he said. “It’s being driven more by a desire for more fresh food and a different kind of lifestyle.”
Within McCormick & Co.’s Flavor segment, sales increased 1% to $537.8 million in the second quarter despite a 3% unfavorable impact from currency. New products and higher business volume and product mix drove the increase.
Companywide over the six months ended May 31, net income of $297.4 million, or $2.25 per share, was down 46% from $545.9 million, or $4.16 per share, in the same time of the previous year. Six-month sales rose 0.7% to $2,533.4 million from $2,516.7 million.