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Key Takeaways
- Clorox shares moved higher Friday after the consumer and professional product supplier beat quarterly profit estimates and issued an upbeat forward-year outlook.
- A streamlined business model helped Clorox expand its gross margin, underpinning earnings growth.
- The company said it would sell its Better Health Vitamins business, and touted its progress on recovering from a 2023 cyberattack.
Clorox (CLX) shares jumped Friday to become the top performer in the S&P 500 after the company known for its namesake bleach and disinfectants reported better-than-expected quarterly profits the day before. Expanding gross margins and cost-reduction efforts helped the provider of consumer and professional products achieve 9% bottom-line growth from the year-ago period.
For its fiscal fourth quarter of 2024, which ended on June 30, Clorox reported adjusted earnings per share (EPS) of $1.82, exceeding the consensus forecast of $1.54. Although net sales of $1.9 billion fell slightly short of estimates calling for $1.97 billion, the results reflected the impact of Clorox’s divestment of its Argentina operations.
Clorox guided for higher full-year fiscal 2025 EPS in a range of $6.55 to $6.80, topping analysts’ projections.
Updates to Operating Model Underpin Margin Expansion
A decrease in manufacturing, logistics, and commodity costs, as well as strategic cost-savings initiatives, helped Clorox expand its gross margin by 380 basis points year-over-year, despite an uptick in trade-promotion spending.
“We made strong progress as we evolved our portfolio to accelerate profitable growth, completed the implementation of our streamlined operating model and advanced our digital transformation,” said Clorox Chief Executive Officer (CEO) Linda Rendle.
Clorox believes that its more-efficient operating strategy will generate annual cost savings of around $100 million and allow the company to innovate more quickly as it adapts to shifting consumer behaviors.
Better Health Divestiture and Recovery From Cyberattack
In line with its more streamlined approach, Clorox announced that it has entered into an agreement to sell its Better Health Vitamins, Minerals, and Supplements business. The deal allows Clorox to focus on core areas of its portfolio, and the company said it believes the transaction will help drive stable growth. No financial terms for the sale were disclosed Thursday.
In another highlight from the quarterly report, Clorox touted its progress on rebounding from a cyberattack that affected the company in late 2023, noting it has recovered most of the market share it lost as a result of the incident and restored its supply chains.
Top Daily Performer in S&P 500 on Friday
Despite a significant downdraft for major U.S. equities indexes on Friday, Clorox stock added by late in the day 7%, turning in the strongest gains of any stock in the S&P 500. Following Friday’s gains, the stock is trading in positive territory for 2024.