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The stock price of McCormick (NYSE: MKC) was down about 3.5% on Tuesday despite the fact that the leading spice maker beat fiscal Q3 earnings and revenue estimates.

The selloff was related to the outlook, which was lowered due, in part, to the impact of tariffs.

• Net sales: $1.73 billion, up 2.7% year-over-year. This beat estimates of $1.71 billion.
• Operating income: $289 million, up from $287 million in the year-ago period.
• Net income: $226 million, up 1.1% year-over-year.
• Earnings: 84 cents per share, up 1.2% year-over-year.
• Adjusted earnings: 85 cents per share, up from 83 cents per share and better than estimates of 82 cents per share
• Gross profit margin: 37.4%, down from 38.7%.

The gross margin was impacted mainly by increased commodity costs due to global trade uncertainty and tariffs.

Tariff headwinds

McCormick has two major segments – Consumer, which is sales of its spices through grocery stores, and Flavor Solutions, which is sales of its products to restaurants and businesses.

Operating income for the Consumer segment rose 4% to $194 million on higher sales and decreased SG&A expenses. However, that was partially offset by increased commodity costs and tariffs.

Flavor Solutions saw a 2% drop in operating income to $100 million, with the decrease driven by higher commodity costs and tariffs, partially offset by pricing and decreased SG&A expenses.

As a result of the dynamic global trade environment, our gross margin was further pressured by rising costs; however, we continued to drive operating profit growth through the effective execution of our cost savings initiatives,” Brendan Foley, chairman, president, and CEO, said … “We remain disciplined on actions within our control and agile in adapting to external dynamics, positioning McCormick for sustained long-term growth.”

Uncertain outlook

McCormick stock was trending lower on Tuesday primarily due to the outlook for the rest of the year. McCormick maintained its net sales growth of 0 to 2% but lowered its earnings and operating income projections.

“The Company’s fiscal 2025 outlook reflects mitigation plans related to tariffs which are currently in place and have increased since August 1, 2025,” the earnings release read. “Due to the ongoing uncertainty around potential new U.S. or retaliatory tariffs, the Company’s outlook is based on tariffs currently in place and does not factor in any potential actions that may arise during the remainder of 2025.”

It cited mitigating actions including sourcing plans supported by advanced analytics, cost savings initiatives, and revenue growth management. The company also plans to invest in its growth initiatives, despite rising inflation and tariffs, supported by its cost-cutting measures.

McCormick stock is down 13% year-to-date and the headwinds have caused several analysts to lower its price target in recent weeks. Most recently, UBS lowered its target to $71 per share from $78. It has a median price target of $82 per share, which would be up 24%, but I wouldn’t be surprised if that target gets revised lower.

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