4 key takeaways from Clorox Q3 financial results

By: Wajeeh Khan
Wajeeh Khan
Wajeeh is an active follower of world affairs, technology, an avid reader, and loves to play table tennis in his free… read more.
on Apr 30, 2021
  • Clorox swings to a net loss of £44 million in the third quarter.
  • The U.S. firm reports lower than expected sales in fiscal Q3.
  • Clorox gave weak guidance for the full financial year on Friday.

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 31st 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.

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