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CLX posted Q4 net sales of $1.99B, up 4.5% year over year, with 8% organic sales growth.
ERP-related shipments boosted volume by 13-14 pts and added 85-95 cents to EPS.
FY26 adjusted EPS is expected to decline 18-23% due to ERP reversal and digital investments.
The Clorox Company (CLX - Free Report) reported impressive fourth-quarter fiscal 2025 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased on a year-over-year basis. Also, organic sales improved year over year.
The company advanced its long-term strategy with the U.S. enterprise resource planning (“ERP”) rollout to support growth and efficiency. For fiscal 2026, the focus remains on operational excellence and market share gains, with continued confidence in long-term value creation.
The Clorox Company Price, Consensus and EPS Surprise
Taking a Sneak Peek Into CLX’s Quarterly Performance
The company posted adjusted earnings of $2.87 per share, which beat the Zacks Consensus Estimate of $2.24. This represents a 57.7% increase from $1.82 per share in the same quarter last year, driven in part by higher volume. Approximately 85 cents to 95 cents of the gain is attributed to additional ERP shipments.
Net sales of $1.99 billion increased 4.5% from the year-ago quarter, driven by an 8-point increase in volume, partially offset by a 4-point decline in price mix. The volume growth was primarily attributed to incremental ERP shipments, which contributed approximately 13-14 percentage points (pts). This growth was partially offset by the divestiture of the VMS business and an unfavorable price mix. Also, the metric beat the consensus mark of $1.93 billion. Organic sales increased 8% year over year.
Gross profit increased 4.5% year over year to $924 million. We note that the gross margin remained flat year over year to 46.5% in the reported quarter. Higher volume and cost savings supported margins, but these benefits were offset by increased manufacturing and logistics costs, as well as elevated trade promotion spending. Incremental ERP shipments contributed approximately 150 basis points to gross margin.
Discussion on CLX’s Segments
Sales of the Health and Wellness segment rose 14% year over year to $741 million, reflecting an 18-point increase in volume, partially offset by a 4-point unfavorable price mix. Our model predicted segment sales of $691.1 million. The volume growth was mainly driven by incremental ERP shipments. The decline in price mix was due to higher trade promotion spending and strong shipments to the Club channel. Segment adjusted EBIT increased 20%, primarily due to higher net sales and reduced advertising expenses, partially offset by increased selling and administrative costs, as well as higher manufacturing and logistics expenses.
The Household segment reported a 7% year-over-year increase in net sales to $639 million, driven by a 13-point increase in volume, partially offset by a 6-point unfavorable price mix. Our model predicted sales of $626.9 million for the segment. Higher volume was largely attributed to incremental ERP shipments, though partially offset by lower consumption and increased competition. The unfavorable price mix was driven by product mix, particularly in Cat Litter, due to Club merchandising activity. Segment adjusted EBIT rose 59%, mainly due to higher volume.
Sales in the Lifestyle segment grew 3% year over year to $339 million, reflecting an 8-point increase in volume, partially offset by a 5-point decline in price mix. We expected net sales of $351 million for the segment. Volume gains were primarily driven by incremental ERP shipments, though partially offset by lower consumption. The decline in price mix was due to increased trade promotion spending and unfavorable product mix. Segment adjusted EBIT increased 54%, primarily due to lower advertising expenses.
The International segment saw a 1% decline in net sales of $269 million, as a 5-point increase in volume was offset by a 4-point unfavorable price mix and a 2-point negative impact from foreign exchange rates. We anticipated net sales of $227.6 million for the segment. Organic sales increased 1%. Volume growth was driven by incremental ERP shipments. The unfavorable price mix reflected product mix and higher trade promotion spending. Segment adjusted EBIT rose 28%, mainly due to higher volume and lower selling, administrative and advertising expenses, partially offset by unfavorable mix and increased trade promotion spending.
Clorox's Financial Update
Clorox ended the quarter with cash and cash equivalents of $167 million, long-term debt of $2.48 billion and stockholders’ equity of $321 million, excluding the non-controlling interest of $161 million.
CLX Stock Past Three-Month Performance
Image Source: Zacks Investment Research
Other Developments in CLX’s Release
As announced in August 2021, the company is undertaking a five-year investment in transformative technologies and processes, which began in fiscal 2022. The $570-$580 million investment includes replacing the ERP system, transitioning to a cloud-based platform, and implementing additional digital technologies to enhance operations across supply chain, digital commerce, innovation and brand building.
Approximately 75% of the total investment is expected to be incremental operating costs, primarily recorded in selling and administrative expenses and adjusted from reported EPS through fiscal 2026. Of these costs, around 70% relate to ERP implementation, with the remainder tied to complementary technologies.
CLX’s Guidance for FY26
The outlook for fiscal 2026 is primarily influenced by the temporary impact of the ERP transition in the United States.
Net sales are expected to decline 6% to 10% compared with the prior year. This projection includes less than 1 percentage point of negative impact from the divestiture of the VMS business and changes in foreign exchange rates. Organic sales are anticipated to decrease 5% to 9%, largely caused by a 7-8 percentage point decline due to the reversal of incremental shipments made in the previous year as part of the ERP transition.
Gross margin is projected to decline 50-100 basis points. A significant portion of this decline, approximately 100 basis points, is attributed to the reversal of the prior year’s ERP-related shipment impact.
Selling and administrative expenses are expected to account for roughly 16% of net sales. This includes an estimated 90 basis point impact from the company’s ongoing strategic investments in digital capabilities and productivity improvements. Spending on advertising and sales promotion is projected to be approximately 11% of net sales, underscoring the company’s continued commitment to supporting its brands.
Earnings per share (EPS) are anticipated to be between $5.60 and $5.95, representing a year-over-year decrease of 14% to 9%. This guidance includes a negative impact of approximately 85 cents to 95 cents per share, stemming from the reversal of incremental shipments associated with the ERP transition in the prior year.
Adjusted EPS is expected to be between $5.95 and $6.30, indicating a decline of 23% to 18% from the previous year. This figure excludes the estimated 35 cents per share impact from long-term investments in digital capabilities and productivity enhancements, while still accounting for the 85 cents to 95 cents per share negative impact related to the ERP-related shipment reversal.
Shares of this Zacks Rank #5 (Strong Sell) company have lost 9.7% in the past three months compared with the industry’s decline of 4.5%.
Some Solid Staple Bets
We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Post Holdings (POST - Free Report) , Nomad Foods Ltd. (NOMD - Free Report) and Medifast, Inc. (MED - Free Report) .
The Zacks Consensus Estimate for Post Holdings’ current sales and earnings indicates growth of 2.7% and 7.3%, respectively, from the year-ago period’s reported figures. POST delivered a trailing four-quarter earnings surprise of 22.9%, on average.
Nomad Foods manufactures and distributes frozen foods. It currently has a Zacks Rank of 2 (Buy).
NOMD delivered a trailing four-quarter earnings surprise of 3.2%, on average. The consensus estimate for Nomad Foods’ current financial-year sales and earnings indicates growth of 8.6% and 10.4%, respectively, from the year-ago period’s reported figures.
Medifast is a leading manufacturer and distributor of clinically proven healthy living products. It currently carries a Zacks Rank of 2. MED delivered a trailing four-quarter average earnings surprise of 142.2%.
The consensus estimate for MED’s current financial-year sales and earnings indicates a decline of 31.9% and 125.5%, respectively, from the prior-year reported levels.
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Clorox Q4 Earnings Beat Estimates, Organic Sales Increase Y/Y
Key Takeaways
The Clorox Company (CLX - Free Report) reported impressive fourth-quarter fiscal 2025 results, wherein both top and bottom lines beat the Zacks Consensus Estimate and increased on a year-over-year basis. Also, organic sales improved year over year.
The company advanced its long-term strategy with the U.S. enterprise resource planning (“ERP”) rollout to support growth and efficiency. For fiscal 2026, the focus remains on operational excellence and market share gains, with continued confidence in long-term value creation.
The Clorox Company Price, Consensus and EPS Surprise
The Clorox Company price-consensus-eps-surprise-chart | The Clorox Company Quote
Taking a Sneak Peek Into CLX’s Quarterly Performance
The company posted adjusted earnings of $2.87 per share, which beat the Zacks Consensus Estimate of $2.24. This represents a 57.7% increase from $1.82 per share in the same quarter last year, driven in part by higher volume. Approximately 85 cents to 95 cents of the gain is attributed to additional ERP shipments.
Net sales of $1.99 billion increased 4.5% from the year-ago quarter, driven by an 8-point increase in volume, partially offset by a 4-point decline in price mix. The volume growth was primarily attributed to incremental ERP shipments, which contributed approximately 13-14 percentage points (pts). This growth was partially offset by the divestiture of the VMS business and an unfavorable price mix. Also, the metric beat the consensus mark of $1.93 billion. Organic sales increased 8% year over year.
Gross profit increased 4.5% year over year to $924 million. We note that the gross margin remained flat year over year to 46.5% in the reported quarter. Higher volume and cost savings supported margins, but these benefits were offset by increased manufacturing and logistics costs, as well as elevated trade promotion spending. Incremental ERP shipments contributed approximately 150 basis points to gross margin.
Discussion on CLX’s Segments
Sales of the Health and Wellness segment rose 14% year over year to $741 million, reflecting an 18-point increase in volume, partially offset by a 4-point unfavorable price mix. Our model predicted segment sales of $691.1 million. The volume growth was mainly driven by incremental ERP shipments. The decline in price mix was due to higher trade promotion spending and strong shipments to the Club channel. Segment adjusted EBIT increased 20%, primarily due to higher net sales and reduced advertising expenses, partially offset by increased selling and administrative costs, as well as higher manufacturing and logistics expenses.
The Household segment reported a 7% year-over-year increase in net sales to $639 million, driven by a 13-point increase in volume, partially offset by a 6-point unfavorable price mix. Our model predicted sales of $626.9 million for the segment. Higher volume was largely attributed to incremental ERP shipments, though partially offset by lower consumption and increased competition. The unfavorable price mix was driven by product mix, particularly in Cat Litter, due to Club merchandising activity. Segment adjusted EBIT rose 59%, mainly due to higher volume.
Sales in the Lifestyle segment grew 3% year over year to $339 million, reflecting an 8-point increase in volume, partially offset by a 5-point decline in price mix. We expected net sales of $351 million for the segment. Volume gains were primarily driven by incremental ERP shipments, though partially offset by lower consumption. The decline in price mix was due to increased trade promotion spending and unfavorable product mix. Segment adjusted EBIT increased 54%, primarily due to lower advertising expenses.
The International segment saw a 1% decline in net sales of $269 million, as a 5-point increase in volume was offset by a 4-point unfavorable price mix and a 2-point negative impact from foreign exchange rates. We anticipated net sales of $227.6 million for the segment. Organic sales increased 1%. Volume growth was driven by incremental ERP shipments. The unfavorable price mix reflected product mix and higher trade promotion spending. Segment adjusted EBIT rose 28%, mainly due to higher volume and lower selling, administrative and advertising expenses, partially offset by unfavorable mix and increased trade promotion spending.
Clorox's Financial Update
Clorox ended the quarter with cash and cash equivalents of $167 million, long-term debt of $2.48 billion and stockholders’ equity of $321 million, excluding the non-controlling interest of $161 million.
CLX Stock Past Three-Month Performance
Image Source: Zacks Investment Research
Other Developments in CLX’s Release
As announced in August 2021, the company is undertaking a five-year investment in transformative technologies and processes, which began in fiscal 2022. The $570-$580 million investment includes replacing the ERP system, transitioning to a cloud-based platform, and implementing additional digital technologies to enhance operations across supply chain, digital commerce, innovation and brand building.
Approximately 75% of the total investment is expected to be incremental operating costs, primarily recorded in selling and administrative expenses and adjusted from reported EPS through fiscal 2026. Of these costs, around 70% relate to ERP implementation, with the remainder tied to complementary technologies.
CLX’s Guidance for FY26
The outlook for fiscal 2026 is primarily influenced by the temporary impact of the ERP transition in the United States.
Net sales are expected to decline 6% to 10% compared with the prior year. This projection includes less than 1 percentage point of negative impact from the divestiture of the VMS business and changes in foreign exchange rates. Organic sales are anticipated to decrease 5% to 9%, largely caused by a 7-8 percentage point decline due to the reversal of incremental shipments made in the previous year as part of the ERP transition.
Gross margin is projected to decline 50-100 basis points. A significant portion of this decline, approximately 100 basis points, is attributed to the reversal of the prior year’s ERP-related shipment impact.
Selling and administrative expenses are expected to account for roughly 16% of net sales. This includes an estimated 90 basis point impact from the company’s ongoing strategic investments in digital capabilities and productivity improvements. Spending on advertising and sales promotion is projected to be approximately 11% of net sales, underscoring the company’s continued commitment to supporting its brands.
Earnings per share (EPS) are anticipated to be between $5.60 and $5.95, representing a year-over-year decrease of 14% to 9%. This guidance includes a negative impact of approximately 85 cents to 95 cents per share, stemming from the reversal of incremental shipments associated with the ERP transition in the prior year.
Adjusted EPS is expected to be between $5.95 and $6.30, indicating a decline of 23% to 18% from the previous year. This figure excludes the estimated 35 cents per share impact from long-term investments in digital capabilities and productivity enhancements, while still accounting for the 85 cents to 95 cents per share negative impact related to the ERP-related shipment reversal.
Shares of this Zacks Rank #5 (Strong Sell) company have lost 9.7% in the past three months compared with the industry’s decline of 4.5%.
Some Solid Staple Bets
We have highlighted three better-ranked stocks from the Consumer Staples sector, namely Post Holdings (POST - Free Report) , Nomad Foods Ltd. (NOMD - Free Report) and Medifast, Inc. (MED - Free Report) .
Post Holdings is a consumer-packaged goods holding company. POST presently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Post Holdings’ current sales and earnings indicates growth of 2.7% and 7.3%, respectively, from the year-ago period’s reported figures. POST delivered a trailing four-quarter earnings surprise of 22.9%, on average.
Nomad Foods manufactures and distributes frozen foods. It currently has a Zacks Rank of 2 (Buy).
NOMD delivered a trailing four-quarter earnings surprise of 3.2%, on average. The consensus estimate for Nomad Foods’ current financial-year sales and earnings indicates growth of 8.6% and 10.4%, respectively, from the year-ago period’s reported figures.
Medifast is a leading manufacturer and distributor of clinically proven healthy living products. It currently carries a Zacks Rank of 2. MED delivered a trailing four-quarter average earnings surprise of 142.2%.
The consensus estimate for MED’s current financial-year sales and earnings indicates a decline of 31.9% and 125.5%, respectively, from the prior-year reported levels.