Clorox Misses Consensus Estimates in Its Fiscal Third Quarter

Image: Clorox’s shares have been under pressure more recently.

By Brian Nelson, CFA

Clorox (CLX) recently reported disappointing third quarter fiscal 2025 results, with both revenue and non-GAAP earnings per share missing the consensus forecast. Net sales declined 8% primarily due to the divestitures of the VMS and Argentina businesses. Organic sales fell 2% due primarily to unfavorable price mix. Organic volume was flat driven by a consumption slowdown across most of its businesses. Gross margin increased 240 basis points, while adjusted earnings per share declined 15% to $1.45 from $1.71 in the year-ago period.

Management had the following to say about the results:

In the third quarter, heightened macroeconomic uncertainties drove changes in shopping behaviors, resulting in temporary category slowdowns and lower sales. We expect these slowdowns to persist in the fourth quarter, as reflected in our updated outlook. Despite this, our fundamentals remain strong as we held overall market shares and continued to expand margin while investing in our trusted brands. In this dynamic environment, we still expect to deliver organic sales growth and another year of strong earnings growth. I (CEO Linda Rendle) am confident in our ability to navigate the short-term given our strong brands and capabilities, while we continue to advance our long-term IGNITE strategy.

Year-to-date, Clorox’s net cash provided by operations was $687 million compared to $355 million in the year-ago period, representing a 94% increase. For fiscal 2025, Clorox expects net sales to be down 1% to flat and adjusted organic sales to be up about 2%. Gross margin is now expected to be up about 150 basis points, with margin enhancement efforts more than offsetting cost inflation, high trade promotion spending, and higher costs from recently implemented tariffs. Adjusted earnings per share is expected to be between $6.95-$7.35, up 13% and 19%, respectively, and the midpoint slightly higher than consensus. Clorox ended the quarter with $2.5 billion in debt and $226 million in cash. We’re steering clear of Clorox due in part to its weak revenue performance and large net debt position. Shares yield 4.1% at the time of this writing.

—–