Clorox, the maker of bleach and branded household cleaners, reported adjusted second-quarter results that missed market expectations as consumers traded down to lower-cost alternatives and the business absorbed rising production and distribution expenses.
On an adjusted basis the company posted earnings of $1.39 per share for the quarter, short of the $1.43 per share analysts had forecast, while revenue fell 1% year-over-year to $1.67 billion. Analyst projections compiled by LSEG had called for revenue to decline about 2.7% to $1.64 billion.
Management said shoppers under pressure from persistent inflation have curtailed purchases of branded floor cleaners and disinfecting sprays in favor of cheaper substitutes. Those shifts in consumer behavior contributed to weaker demand in key categories.
Clorox described a sharp deterioration in its Household segment, which is the company’s second-largest by revenue and includes items such as bags, wraps and cat litter. Adjusted earnings before interest and taxes in that unit dropped 54% during the quarter, a decline the company attributed to the combination of higher manufacturing and logistics costs and lower net sales.
The company continues to expand its product footprint, having introduced ready-to-eat offerings marketed as protein-packed snacks, including Hidden Valley Ranch Dippers & Toppers, and it is in the process of acquiring GOJO Industries, the maker of Purell, in a deal valued at $2.25 billion to bolster its position in health and hygiene categories.
For the full year the company reiterated its guidance, forecasting net sales to fall between 6% and 10% and projecting adjusted earnings per share in the range of $5.95 to $6.30. Executives noted that earlier order fulfillment challenges resulted in lower consumption and some market share losses, which keeps expectations anchored toward the lower end of the guidance ranges.
Context and implications
- Shifts in consumer purchasing toward lower-priced alternatives and portfolio-level cost pressures are combining to compress margins in household cleaning categories.
- Operational disruptions in order fulfillment earlier in the year are specifically cited as a factor that weakened consumption and contributed to lost market share, influencing the company’s cautious guidance.
- Strategic moves such as entering protein-packed ready-to-eat snacks and pursuing the acquisition of GOJO Industries are aimed at diversifying revenue sources and strengthening health and hygiene exposure.