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Mar 31, 2024
Clorox Q3 2024 Earnings Report
Clorox reported a decrease in net sales but an increase in adjusted EPS, making progress on long-term strategies and recovering from a cyberattack.
Key Takeaways
Clorox reported a 5% decrease in net sales to $1.81 billion, impacted by lower volume from cyberattack-related distribution losses and unfavorable foreign exchange rates. However, adjusted EPS increased by 13% to $1.71, driven by pricing and cost savings. The company is on track to restore lost distribution by the end of Q4 and expects to exit fiscal year 2024 with strong fundamentals.
Returned to normalized service levels by the end of the third quarter, enabling merchandising and distribution restoration in the fourth quarter.
Achieved the sixth consecutive quarter of gross margin expansion, supported by pricing in International and cost savings.
Made continued progress in restoring market share, with nearly 90% of cyberattack-related share losses now recovered.
Completed the divestiture of the Argentina business to evolve its portfolio for more consistent, profitable growth.
Clorox
Clorox
Clorox Revenue by Segment
Clorox Revenue by Geographic Location
Revenue by Segment
Health and Wellness Revenue
CapyFin.comHousehold Revenue
CapyFin.comLifestyle Revenue
CapyFin.comInternational Revenue
CapyFin.comRevenue by Geographic Location
International Revenue
CapyFin.com Forward Guidance
The company continues to expect net sales to be down low single digits and organic sales are still expected to be up low single digits, but also at the low end of the range. Gross margin is now expected to be up about 275 basis points. Adjusted EPS is now expected to be between $5.80 and $5.95, or an increase of 14% to 17%.
Positive Outlook
- Gross margin is now expected to be up about 275 basis points, reflecting the benefit of lower input cost headwinds and the modest benefit from exiting Argentina.
- It continues to reflect the combined benefit of pricing actions, cost savings and supply chain optimization.
- Adjusted EPS is now expected to be between $5.80 and $5.95, or an increase of 14% to 17%.
- The sales outlook now assumes 3 points of unfavorable foreign exchange rates, versus the previous assumption of 5 points, driven primarily by the divestiture of the Argentina business.
- Selling and administrative expenses continue to be expected to be between 16% to 17% of net sales.
Challenges Ahead
- The company continues to expect net sales to be down low single digits. However, it is now expected to be at the low end of the range, reflecting the impact of the divestiture of the business in Argentina as well as third quarter results.
- Organic sales are still expected to be up low single digits, but also at the low end of the range.
- Advertising and sales promotion spending is now expected to be higher than 11% of net sales, mainly reflecting the impact of lower sales in the third quarter as well as the exit from Argentina.
- The company's effective tax rate is now expected to be about 31%, compared to the previous expectation of about 22% to 23%. This increase is primarily driven by the divestiture of the Argentina business.
- It continues to reflect the combined benefit of pricing actions, cost savings and supply chain optimization, partially offset by supply chain inflation and the impact from the cyberattack.
Revenue & Expenses
Visualization of income flow from segment revenue to net income