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Inflation: Clorox is jacking up prices (again)

·Anchor, Editor-at-Large
·3 min read
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After another eyesore of a quarter fueled by inflation, Clorox (CLX) will ask consumers to pay even more for the privilege of using its iconic bleach and other products such as Glad trash bags and Hidden Valley Ranch salad dressing.

The wildcard is whether consumers balk and shun Clorox products for cheaper alternatives.

"So, as you recall, we announced a round of pricing — our first round in the fall — that was fairly broad across our portfolio," Clorox CEO Linda Rendle told analysts on a Monday earnings call. "We have since taken a subsequent round that was effective this month — in April, and we're starting to see that flow through in the marketplace. And then we have an additional round of pricing scheduled for July. That is also broad across our portfolio, and we're actually going deeper than we had intended to go when we first announced the price increase given what we're seeing from the impact on Ukraine. So we made that decision shortly after we saw the impacts. In total, the vast majority of our portfolio will be priced, and the majority of the portfolio will also have multiple rounds across all three of those time periods."

Inflation is reaching inside washing machines. (Photo: Clorox)
Inflation is reaching inside washing machines. (Photo: Clorox)

The knock-on effects of inflation in areas like oil and resin weren't hard to spot in Clorox's latest results.

Operating profits fell in all three of Clorox's most important business segments: health and wellness, household, and lifestyle. The profit declines were paced by a 42% adjusted drop within the company's health and wellness business, which houses the core cleaning business.

Clorox's quarterly gross profit margins also fell 760 basis points from a year ago due to "higher manufacturing and logistics and commodity costs."

Here is how Clorox performed compared to Wall Street estimates for its most recent quarter:

  • Net Sales: $1.81 billion vs. $1.79 billion

  • Gross Profit Margin: 35.9% vs. 34.4%

  • Adjusted EPS: $1.31 vs. $0.93

Clorox slashed its earnings outlook yet again: The company sees full year adjusted earnings of $4.05 to $4.30 a share, down from a forecast of $4.25 to $4.50 divulged back in early February. Back on Nov. 1, 2021, Clorox had forecast full fiscal year adjusted EPS of $5.40 to $5.70.

Shares of Clorox fell 2% in after-hours trading in the wake of the barrage of negative earnings news. The lackluster earnings day for Clorox positions investors for further relative underperformance this year compared to key consumer products companies.

On the other side of the aisle, the stock price of Tide-maker Proctor & Gamble (PG) are only down slightly on the year. P&G CEO Jon Moeller told me recently his company continues to successfully raise prices amidst the ongoing inflationary backdrop. That has helped P&G, unlike Clorox, to deliver consistent quarterly results and achievable guidance the past year of the inflation explosion.

Brian Sozzi is an editor-at-large and anchor at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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