4 key takeaways from Clorox Q3 financial results

Clorox Co. (NYSE: CLX) said on Friday its sales missed estimates in the fiscal third quarter. The company swung to a loss in Q3 attributed to a pre-tax non-cash impairment charge related to its Better Health Vitamins, Minerals and Supplements business. Clorox gave weaker-than-expected guidance for the full year on Friday

1. Financial performance

Clorox reported £44.15 million of net loss in the third quarter that translates to 35.47 pence per share. In the comparable quarter of last year, it had posted £174.44 million of earnings, or £1.37 per share.  

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Adjusted for impairment charge, the household cleaning products maker earned £1.17 per share in the quarter that concluded on 31^st March. Clorox generated £1.29 billion of sales in Q3 versus the year-ago figure of £1.30 billion.

According to FactSet, experts had forecast the company to record £1.34 billion of sales in the recent quarter and £1.07 of adjusted EPS. In the prior quarter (Q2), Clorox had reported £1.33 billion in net sales.

2. Sales from individual business segments

Increased commodity, manufacturing and logistics costs, Clorox added, resulted in a 320-basis points contraction in its gross margin. Health and wellness sales in the third quarter slid 8% that was partially offset by a 6% annualised growth in household sales.

According to Clorox, sales of lifestyle goods remained unchanged in Q3, while international sales saw a 9% year over year increase.

3. Guidance for the full financial year

Clorox now forecasts its adjusted per-share earnings to fall in the range of £5.39 to £5.54 this year. FactSet consensus for its adjusted EPS in fiscal 2021 stands at £6.06. The Oakland-headquartered company expects up to 13% growth in its full-year sales.

4. Chief Executive Linda Rendle’s remarks

CEO Linda Rendle commented on the earnings report on Friday and said:

“What’s important is that we’re on track to deliver our best full-year top-line growth in more than 20 years. Looking ahead, our portfolio continues to play a meaningful role in addressing consumer megatrends that have accelerated in the last 12 months, positioning us well to fulfil our ambition to accelerate long-term, profitable growth.”

Impact on the share price

Clorox shares tanked close to 4% in premarket trading on Friday. Including the price action, the stock is now exchanging hands at £130.49 per share versus £145.08 per share at the start of the year. At the time of writing, Clorox is valued at £16.42 billion and has a price to earnings ratio of 18.88.