The Clorox Company CLX reported impressive first-quarter fiscal 2027 results, with the top and bottom lines surpassing the Zacks Consensus Estimate. Higher sales, cost savings and a lower tax rate supported earnings growth, while elevated commodity, manufacturing and logistics costs pressured the gross margin.
Adjusted earnings surged 82% year over year to $1.55 per share, beating the Zacks Consensus Estimate of 97 cents.
Net sales increased 33% year over year to $1.91 billion, surpassing the consensus mark of $1.87 billion. Organic sales grew 18%, primarily benefiting from the prior-year ERP transition-related inventory drawdown comparison.
The Clorox Company Price, Consensus and EPS Surprise
The Clorox Company price-consensus-eps-surprise-chart | The Clorox Company Quote
Clorox's net sales growth reflected a 31-percentage-point contribution from higher volume and two points from favorable price mix. The GOJO acquisition contributed approximately 15 percentage points. The organic volume increased 17%, while the organic price mix added one point.
Sales benefited from a less pronounced shipment decline in Kingsford and stronger-than-expected international demand for cleaning and disinfecting products. However, the comparison with inventory reductions in the year-ago ERP transition contributed approximately 18 percentage points to organic sales growth.
Shares of the Zacks Rank #4 (Sell) company have declined 14.1% in the past three months against the industry’s 4.6% rise.
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Clorox’s Gross Margin Contracts on Elevated Costs
Gross profit increased 29.2% year over year to $770 million from $596 million. However, the gross margin contracted 130 basis points (bps) to 40.4% from 41.7%, reflecting higher commodity, manufacturing and logistics expenses. GOJO inventory step-up costs created an additional 50-bps headwind.
Commodity costs reduced the gross margin by 360 bps, while manufacturing and logistics expenses contributed a 210-bps decline. These pressures were partly offset by 260 bps of cost savings and 100 bps of pricing benefits. The adjusted gross margin, excluding acquisition and integration costs, was 40.9%.
Clorox Records Higher Operating Expenses
Selling and administrative expenses increased 4.7% year over year to $290 million from $277 million. These expenses represented 15.2% of sales and included $16 million of GOJO transaction-related costs. Excluding these costs, the adjusted expense ratio was 14.4%.
Advertising expenses increased 14.5% to $190 million from $166 million, representing approximately 10% of sales. Research and development expenses increased to $29 million from $28 million. Interest expenses climbed to $52 million from $23 million.
Adjusted EBIT increased to $284 million from $160 million, with the adjusted EBIT margin expanding to 14.9% from 11.2%.
Clorox Delivers Growth Across All Segments
Health and Wellness sales surged 62% year over year to $918 million. GOJO contributed approximately 39 percentage points to growth, while organic sales advanced 23%. Segment adjusted EBIT increased 69% to $209 million, supported by higher sales and cost savings.
Household sales increased 17% to $423 million, primarily reflecting higher volumes from the ERP-related comparison. Segment adjusted EBIT rose 11% to $30 million despite elevated commodity and manufacturing costs.
Lifestyle sales advanced 16% to $283 million, driven by higher volume and favorable price mix. Segment adjusted EBIT increased 58% to $60 million, supported by revenue growth.
International sales increased 11% to $281 million, while organic sales grew 9%, benefiting from strong Latin American shipments. Segment adjusted EBIT climbed 63% to $31 million.
CLX Advances Brand & Portfolio Initiatives
Clorox officially launched Clorox Purell ProCare, combining CloroxPro and GOJO operations. Management indicated that integration remained on track, with acquisition synergies expected to benefit profitability later in fiscal 2027.
Cleaning delivered strong growth and improving market share, supported by successful back-to-school execution and Scentiva innovation. Kingsford benefited from better-than-expected Labor Day performance, while Cat Litter remained challenged despite early signs of improvement.
Clorox Maintains FY27 Earnings Guidance
For fiscal 2027, Clorox expects net sales growth of 13-14%, including 9.5 percentage points from GOJO. Organic sales are projected to increase 3.5-4.5%, benefiting from the ERP-related comparison.
The company lowered its gross margin expectation to 41.5%, reflecting increased commodity and transportation costs. Input cost headwinds are estimated at $240 million. Selling and administrative expenses are projected at 15.5% of sales.
Adjusted earnings guidance is at $5.70-$6.00 per share, indicating 3-8% year-over-year growth. However, management expects results near the lower end of the range. Second-quarter fiscal 2027 sales are projected to increase 11-13%, with organic sales ranging from flat to a 2% decline.
CLX Cash Flow & Balance Sheet Update
The operating cash flow increased 54% year over year to $143 million from $93 million. Capital expenditure totaled $38 million compared with $36 million a year earlier. The free cash flow increased to $105 million from $57 million.
Clorox ended the quarter with $184 million in cash and cash equivalents compared with $143 million at fiscal 2026-end. Long-term debt stood at $3.98 billion, while notes and loans payable totaled $1.18 billion.
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Newell Brands Inc. NWL is a global manufacturer and marketer of consumer and commercial products, including Paper Mate, Sharpie, Dymo, EXPO, Parker, Oster, Rubbermaid, FoodSaver and Graco. At present, NWL has a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
The Zacks Consensus Estimate for Newell Brands’ current fiscal-year sales and earnings implies growth of 1.6% and 33.3%, respectively, from the year-ago reported figures. NWL delivered a trailing four-quarter earnings surprise of 41.4%, on average.
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The Zacks Consensus Estimate for Purple Innovation’s current fiscal-year sales implies a decline of 8.5% from the year-ago reported figure, while the same for earnings suggests growth of 36.3%. PRPL delivered a trailing four-quarter earnings surprise of 21.3%, on average.
BJ’s Wholesale Club Holdings, Inc. BJ is a leading membership-based warehouse club operator concentrated primarily in the eastern half of the United States. BJ currently carries a Zacks Rank #2.
The Zacks Consensus Estimate for BJ’s Wholesale’s current fiscal-year sales and earnings implies growth of 11.7% and 6.6%, respectively, from the year-ago actuals. BJ delivered a trailing four-quarter negative earnings surprise of 4.8%, on average.
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The Clorox Company (CLX): Free Stock Analysis Report
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