Executives and investors are trying to gauge how the coronavirus outbreak could affect business in real time, and McCormick & Company head Lawrence Kurzius was candid on Thursday, saying, “It’s hard to say that it’s a positive.”
“Right now, it’s hard to know the impact of the coronavirus in China. We have a large business in China,” the chief executive told CNBC’s Jim Cramer in a sit-down on “Mad Money.” “Part of it is supplying consumers, part of it is supplying restaurants. Consumers are not, you know, going out. A lot of the country’s on lockdown.”
Last week, Cramer suggested that McCormick, the parent of Old Bay Seasoning, French’s and Frank’s Red Hot, could be a stock worth investing in to hedge against the novel virus that originated in the Chinese city of Wuhan and has spread across the globe. The host recommended it as the “ultimate stay-at-home stock” because the company sells a range of condiments and seasonings consumers can stock up in their kitchen cabinets.
As the outbreak reached epidemic levels in the Hubei province and trickled across the world, Chinese officials placed multiple cities there on partial or complete lockdown. The region is a major manufacturing center for companies doing business with American companies.
In Wuhan, the virus’s epicenter, McCormick employs more than 900 people, Kurzius said. He added that it’s unclear how it could impact operations, though supplies outside the China market will not be affected. McCormick’s China factory makes products for that market, he said.
“Right now, our No. 1 concerns are for the health and safety of our employees and the quality and integrity of our products,” he said. “It’s a little soon to know … the financial impact, but it can’t be a positive, you know, when people aren’t going out to restaurants and consuming our customers’ products. I think it’s a tough time there.”
McCormick shares have climbed almost 32% to $162.12 in the past year. The stock has traded in the red within the past two weeks.