McCormick & Co. has secured its place on the shelves of Walmart, the world's largest retailer, and will start stocking those stores with some of its new products.
Sparks-based McCormick executives announced Thursday that the company's products will continue to be the core spice sold at Walmart stores, ending months of concern that the retailer would take away some — or all — of the seasoning company's shelf space in favor of a generic brand. Walmart also is testing McCormick spices in some of its Sam's Club stores.
"It hopefully eases some of the concerns that have been out there for the last 18 months are so," Alan D. Wilson, McCormick's chief executive, told analysts during a conference call. "We're taking it as great news."
More consumers have traded down to cheaper, generic versions of some food products because of the economy, and Walmart had been testing a larger mix of generic-brand spices in some of its stores.
But in an earnings call Thursday, McCormick executives said Walmart had informed them that it would continue selling a mix of McCormick and a generic brand. The retailer also will sell new McCormick products, including a line called Recipe Inspirations.
Analysts had raised questions about less shelf space at Walmart affecting McCormick sales. Because Walmart has such a huge retailing footprint, manufacturers want their goods sold there. McCormick generates about 11 percent of its sales from Walmart.
McCormick also reported Thursday that its second-quarter profit rose nearly 31 percent as it benefitted from the sale of higher-margin products.
The company reported net income of $66.2 million, or 49 cents per share, for the three months that ended May 31 compared with net income of $50.7 million, or 38 cents per share, during the corresponding period a year ago.
Revenue increased 5 percent to $798 million from $757 million a year ago. Sales were boosted by favorable currency exchange rates and a higher volume and product mix.
The company said it increased volume and product mix in the Americas with the introduction of new products such as Recipe Inspirations, a cooking kit that comes with a recipe, premeasured spice packets and a shopping list. Recipes include Apple & Sage Pork Chops and Garlic Lime Chicken Fajitas.
The company spent 22 percent more on marketing during the quarter to promote new products.
McCormick said it expects annual net income at the high end of its previous forecast. It had forecast earnings in the range of $2.49 per share to $2.54 per share.