Clorox Disappoints - Analyst Blog
May 03 2011 - 7:47AM
Zacks
Clorox Corporation (CLX) posted lower
third-quarter fiscal 2011 earnings of $1.03 per share compared with
$1.07 per share in the year-ago quarter. Reported quarter earnings
also failed to meet the Zacks Consensus Estimate of $1.04 per
share.
Clorox’s net sales during the quarter increased 1.3% year over
year to $1,304 million from $1,287 million in the year-ago quarter.
However, total revenue fell short of the Zacks Consensus Estimate
of $1,321 million.
Total volume in the quarter inched up 1% as the company
benefited from volume gains from Burt's Bees natural personal care
products, the Away From Home institutional business and Home Care
category. However, this was partially offset by decline in volume
in the Glad and Brita businesses.
Revenue by Segment
Clorox’s sales in the Cleaning segment jumped 3% due to a 4%
growth in volume. The increase in segment volume was mainly
attributable to higher shipments of Clorox disinfecting wipes,
Pine-Sol dilutable cleaners, Clorox Clean-Up cleaner and Clorox
bathroom cleaners partially offset by lower shipments of Tilex mold
and mildew remover and Clorox 2 stain fighter and color
booster.
Household segment sales inched down 3% primarily due to a
decline in volume by 3%. Decrease in volume in the segment was
primarily attributable to lower shipments of Glad food-storage
products and Glad Trash Bags, partially offset by increased
shipments of Kingsford charcoal and Scoop Away cat litter.
Clorox’s Lifestyle segment recorded flat growth in the quarter
compared with the base period, a year ago, on the back of stepped
up trade promotion spending and poor product mix. However, volume
for the segment increased by 3% in the quarter. The volume growth
was primarily driven by higher shipments of Burt’s Bees natural
care products and Hidden Valley salad dressing, partially offset by
lower shipments of Brita water-filtration products.
In the International segment, Clorox’s sales grew 8%, while
volume came in flat. Favorable pricing coupled with positive
currency impact offset by higher promotion spending led to the
variance between revenue and volume. Flat growth in volume was
primarily driven by lower shipments of Clorox disinfecting wipes in
Latin America offsetting the positive impact of higher shipments in
Canada.
Margins
Clorox’s gross margin decreased 50 basis points (bps) to 44.1%
from 44.6% in the year-ago quarter due to unfavorable product mix,
increased commodity costs, and higher manufacturing and logistics
costs. This was partially offset by the benefit of price increases
and prudent cost savings in the quarter.
Balance Sheet and Cash Flow
At quarter end, Clorox had cash and cash equivalents of $153
million and long-term debt of $2,125 million compared with a cash
balance of $241 million and a long-term debt of $2,132 million in
the year-ago quarter. During the quarter, the company generated
$217 million of cash from operations compared with $210 million in
the year-earlier period.
Rise in operating cash flow was primarily driven by positive
impact from working capital changes.
Guidance
Looking ahead, Clorox anticipates annual earnings of $3.85 to
$3.95 per share on flat to 1% growth in sales for fiscal 2011.
Gross margin is expected to decrease in the range of 75 to 100
basis points.
For fiscal 2012, the company expects annual earnings of $4.00 to
$4.10 per share on 1% to 3% growth in sales. Gross margin is
projected to decrease in the range of 25 to 50 basis points.
Clorox Corporation, which competes with names like
Colgate-Palmolive Company (CL) and Procter
and Gamble Company (PG), currently has a Zacks #3 Rank,
implying a short-term Hold rating on the stock. The company retains
a long-term Neutral recommendation on the stock.
COLGATE PALMOLI (CL): Free Stock Analysis Report
CLOROX CO (CLX): Free Stock Analysis Report
PROCTER & GAMBL (PG): Free Stock Analysis Report
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