Clorox falls after cutting annual profit outlook
CLOROX Co. shares fell after the company lowered its outlook for full-year earnings amid stubbornly rising costs while reporting profit in its latest quarter that exceeded market expectations.
The maker of Pine-sol and Glad trash bags now sees earnings per share of $4.05 and $4.30, excluding some items, for its fiscal year ending in June. That compares to the prior expectation of $4.25 to $4.50. Chief Executive Officer Linda Rendle said the change is due to an extra $30 million of incremental costs that the company now expects during the period.
Clorox has benefited from heightened demand for cleaning products since the pandemic began, but rawmaterial inflation and supply-chain snags are now obstructing growth. The new outlook for $530 million of extra expenses, up from a previous prediction of $500 million, is due to the recent jump in oil prices—which also affects the cost of resins and transportation.
“When we said our prior outlook, there was not a war in Ukraine,” Rendle said in an interview on Monday. “We certainly didn’t expect the energy complex to do what it did.”
The shares fell 4 percent at 4:33 p.m. time in extended trading in New York. Clorox stock has fallen 18 percent this year through Monday’s close, outpacing the 0.6 percent decline of the S&P 500 Consumer Staples Sector Index. Clorox is the third-worst performer in the index over that span.
Higher costs will result in a steeper-than-expected hit to gross margins this fiscal year, the owner of natural skincare line Burt’s Bees and salad-dressing brand Hidden Valley said in a statement. The measure is now seen decreasing as much as 800 basis points, compared to a prior call for a drop of 750 basis points.
Organic sales, which exclude the impact of currency fluctuations and acquisitions, are still seen falling by 1 percent to 4 percent, unchanged from the previous forecast.
Charging more
CLOROX has raised prices several times to offset inflation, including new rounds last fall and in April, with another coming in July, Rendle said. Consumer demand is resilient despite higher prices, the company said.
It is also looking to trim costs with measures such as eliminating unnecessary plastic packaging and bringing more manufacturing back in-house. The company had turned to external contractors to deal with the surge in pandemic demand.