uploads///Q lifestyle seg overview

Robust Gains in Clorox’s Lifestyle Segment Driven by Burt’s Bees

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Jun. 3 2016, Updated 10:07 a.m. ET

Lifestyle segment’s revenue highlights

Clorox’s (CLX) Lifestyle segment’s volume grew by 4% and sales grew by 4.5% in fiscal 3Q16, the highest among all segments. The increase was primarily due to the double-digit gains in Natural Personal Care. This was driven by innovation in Burt’s Bees lip color and blemish balm cream, as well as continued growth in tinted lip balms.

The Lifestyle segment’s revenue came in at $0.3 billion in fiscal 3Q16. Adding to the revenue was the double-digit volume growth of the Brita Water Filtration business, particularly in the e-commerce channel. In addition, the Lifestyle segment’s Food business sales increased, driven by the expansion of its Ranch with Bottled Salad dressings.

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Despite slightly lower volumes in the food business, the fiscal 3Q16 volume for Clorox’s kosher Soy Vay Asian sauces and marinades increased significantly. Clorox acquired the Soy Vay line several years ago. Also, the February 2016 launch of its Greek Yogurt dressing and dips increased the volume of Clorox’s dry food business.

Operating income

The Lifestyle segment’s fiscal 3Q16 operating income fell by 1.4%. The decrease was primarily due to significantly higher advertising and sales promotion spending, as well as trials behind product innovation in all three businesses.

Highly competitive food and beverage industry

Clorox (CLX) is engaged in a highly competitive food and beverage industry. Unilever’s (UL) Best Foods salad dressing and Knorr sauces compete with CLX’s products in the US and internationally. Clorox’s peers Procter & Gamble (PG) and Colgate-Palmolive (CL) do not market salad dressing and sauces.

Clorox is focusing on Brita’s water filtration product via a partnership between Brita and Stephen Curry, the Golden State Warriors’ point guard who is the NBA’s first unanimous MVP. This partnership aims to create demand through national television ads as well as digital and social media.

CLX makes up 2.1% of the ProShares S&P 500 Dividend Aristocrats ETF (NOBL).[1. Updated on May 31, 2016]

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