Clorox Reports 15% Decline in Q2 Net Sales, Earnings Per Share Increase 105%

The Clorox Company reported a decline in net sales for the second quarter of fiscal year 2024, with revenues totaling $1.686 billion, down 15% from $1.990 billion in the same period last year. For the first half of the fiscal year, net sales increased slightly by 2% to $3.448 billion compared to $3.376 billion in the prior year. The decrease in quarterly sales was attributed to the impact of divestitures, specifically the Better Health Vitamins, Minerals, and Supplements (VMS) business and the Argentina business, as well as the residual effects of a cyberattack that disrupted operations in August 2023.

Gross profit for the quarter was $738 million, reflecting a 15% decrease from $866 million a year earlier, while gross margin improved to 43.8% from 43.5% due to cost savings and the benefits from the divestitures. Selling and administrative expenses decreased by 13% to $280 million, primarily due to lower costs associated with the cyberattack in the prior year. Advertising costs increased by 3% to $191 million as the company continued to invest in brand support. The company reported net earnings of $194 million, or $1.54 per diluted share, compared to $96 million, or $0.75 per diluted share, in the prior year, marking a 105% increase in earnings per share.

Strategically, Clorox completed the divestiture of its Better Health VMS business on September 10, 2024, which included several brands and associated assets. This move is part of the company's ongoing efforts to streamline its portfolio and focus on core areas that drive consistent and profitable growth. The divestiture resulted in a loss of $118 million recorded in the first half of the fiscal year. Additionally, the company has implemented a new streamlined operating model, which is expected to generate annual cost savings moving forward.

Operationally, Clorox continues to face challenges from macroeconomic conditions, including inflation and supply chain disruptions. The company reported a total employee headcount of approximately 7,400, with operations in about 25 countries. The company’s largest customer, Walmart, accounted for 26% of consolidated net sales in the latest quarter. Clorox is also recovering from the cyberattack, which had significant operational impacts, but has since returned to normalized operations.

Looking ahead, Clorox anticipates a volatile operating environment for the remainder of fiscal year 2025, driven by ongoing macroeconomic uncertainties and geopolitical tensions. The company plans to continue investing in its brands and capabilities to drive growth and improve margins. Despite the challenges, Clorox remains committed to evolving its portfolio and enhancing operational efficiencies to achieve sustainable growth.