A tariff refund gave McCormick & Co. a lift earlier this year, but the spice maker says it will not last. In its third-quarter earnings release on October 1, the company said the benefit of the refund of the emergency tariffs the Supreme Court struck down “will be offset with increased inflationary costs, including costs related to the Middle East conflict.” Higher prices, meanwhile, added 2.2 percent to its sales in the quarter ended August 31.
The company recognized the refund, tied to tariffs President Trump imposed under the International Emergency Economic Powers Act, primarily in the second quarter of 2026. The Supreme Court ruled in February that the law “does not authorize the President to impose tariffs.”
Shoppers who buy seasonings, spice blends and condiments want to know whether refunds on tariffs will keep prices from climbing. McCormick’s own numbers answer part of it: the company raised prices enough to add 2.2 percent to sales, and it expects costs to absorb the refund. The release does not say whether shelf prices will go up again, and the 2.2 percent is a measure of sales growth, not a price change on any one jar.
McCormick’s full-year adjusted earnings outlook of $3.05 to $3.13 a share is the number that gets re-tested each time the company reports, which happens every quarter.
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What the 2.2 percent covers
Net sales rose 17.4 percent to $2,024.8 million in the quarter. Most of that, 14.6 points, came from the acquisition of McCormick de Mexico. Organic growth was 1.9 percent, and it split into price, which added 2.2 points, and volume and product mix, which subtracted 0.3 points. Currency added another 0.9 points.
The same 2.2-point price contribution showed up in both of the company’s business segments. In the consumer segment, sales rose 24.9 percent as reported, and organic sales grew 1.1 percent: price added 2.2 points while volume and mix fell 1.1 points. In the flavor solutions segment, which sells to food makers and restaurants, sales rose 7.7 percent, organic sales rose 3.0 percent, and price added 2.2 points while volume and mix added 0.8.
The consumer figures are the telling ones. Price added more to the consumer business than the whole of its organic growth, because volume and mix fell 1.1 points.
The arithmetic on the organic line is worth stating plainly. Organic growth was 1.9 percent, price contributed 2.2 points and volume and mix took away 0.3 points, so price more than accounts for all of the organic gain. Take price out and organic sales would have shrunk slightly. The acquisition of McCormick de Mexico, at 14.6 points, did the heavy lifting for reported growth.
The company’s filing index shows the earnings release as an exhibit to a Form 8-K filed under Items 2.02 and 9.01, the items used to report results of operations and to attach exhibits. The release covers the quarter ended August 31, 2026.
Profit: a gap between GAAP and adjusted
Earnings per share were $0.36 on a GAAP basis, compared with $0.84 a year earlier. Special charges cut GAAP earnings by $0.50 a share. On an adjusted basis, earnings were $0.86, up from $0.85. GAAP operating income was $217.0 million, down 24.8 percent, while adjusted operating income was $358.5 million, up 22.1 percent. Gross margin was 39.3 percent, up 190 basis points.
McCormick reaffirmed its fiscal 2026 outlook: net sales growth of 13 to 17 percent as reported, organic growth of 1 to 3 percent and adjusted earnings of $3.05 to $3.13 a share, with an acquisition contribution of 11 to 13 percent. The release gives no dollar amount for the tariff refund or for the costs expected to offset it.
Chairman, President and Chief Executive Brendan M. Foley said in the release that “third quarter results demonstrate the resilience and differentiated performance of our flavor-focused business model.”
What the offset language does and does not say
The wording in the release is narrow. The benefit of the refund, the company says, will be offset with increased inflationary costs, “including costs related to the Middle East conflict,” and with continued growth investments. It does not describe those costs by product, and it does not announce a price increase.
That leaves two things established: the refund came through mostly in the spring, and the costs the company expects for the rest of the year are large enough to cancel its effect. Whether those costs reach shelf prices will depend on decisions McCormick has not announced.
Reading McCormick’s pricing signals before the next quarter
The company’s earnings release was filed with the Securities and Exchange Commission as an 8-K, which means the figures above are the same ones investors received on October 1. For shoppers, the useful numbers are the price and volume lines in the consumer segment, because they show how much of the company’s growth came from charging more and how much from selling more.
When the next quarter is reported, the same two lines will show whether price kept adding about two points while volume continued to slip. Watching those lines is a more direct way to follow spice and seasoning costs than any single item at the store, since a jar’s price can move for reasons that never reach the company’s totals.
The company’s full-year outlook is the other thing to watch. If adjusted earnings stay in the $3.05 to $3.13 range after the refund is absorbed, the company’s cost pressures are being covered without a large new round of price changes.
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This article was produced with AI assistance and reviewed by The Financial Wire’s editorial team.
Warren Cohen is a finance writer based in Phoenix, Arizona, covering personal finance topics including credit, banking, and beginner investing. He earned his degree in business administration from Arizona State University and began his career working in consumer finance, where he gained direct experience with lending and credit systems. He now writes for personal finance websites and fintech platforms, focusing on clear, practical content that helps readers make informed financial decisions.
