McCormick (NYSE:MCK) is just starting to see an effect from the COVID-19 outbreak. The global spice and flavorings giant on Tuesday reported fiscal first-quarter results that showed mounting pressure on its sales and profits just before social containment measures ramped up in the U.S. market.
The reporting period ran through Feb. 29, which included peak economic disruptions in China but none of the domestic efforts that began in mid-March. Still, McCormick said restaurant closures in that market reduced sales growth by 3 percentage points, leading to a 1% decline rather than a 2% increase. Profits were pressured even more as the China market reduced earnings growth by 10%. "Our first-quarter results were significantly impacted by the extraordinary disruption in China's consumption related to the COVID-19 outbreak," CEO Lawrence Kurzius said in a press release.
Those trends suggest an even bigger challenge ahead for the fiscal second quarter that will be marked by widespread restaurant closures across the U.S. While McCormick is seeing extra demand for its pantry items as more consumers cook at home, the overall effect on its business is impossible to predict today. As a result, the company withdrew its annual financial targets and promised to offer investors a clearer outlook as part of its next earnings report in June.