Sales, strong volumes

Clorox’s (CLX) sales of $1.4 billion in fiscal 2Q17 represents a 4.5% YoY (year-over-year) rise—its highest growth in the past four years—driven by growth across its US (SPY) business segment. The company’s continued investments in product innovation and efficient marketing have led to volume expansions in each of its segments. CLX’s total volumes rose 8%, marking the company’s second consecutive quarter with 8% growth and its highest in nearly the past ten years.

Why Clorox’s Recent Sales Performance Instills Confidence

As we discussed in Part 1 of this series, peers Procter & Gamble (PG), Kimberly-Clark (KMB), and Church & Dwight (CHD) reported healthy organic sales (excluding the impact of acquisitions, divestitures, and foreign exchange), coupled with higher volumes in their last reported quarters. But Clorox has outshined the lot in sales and volume growth.

Business segments remain strong

Clorox witnessed a rise in volumes in all of its four business segments, which include Cleaning, Household, Lifestyle, and International. In fiscal 2Q17, strong product demand led to a 10%, 11%, 5%, and a 2% rise in volumes in the Cleaning, Household, Lifestyle, and International segments, respectively.

Most of the Clorox’s product categories command superior market shares and are supported by effective marketing and innovation. In Home Care, Clorox Scentiva, the new line of disinfecting sprays and wipes, is witnessing a healthy initial sales trend, and the innovative new cleaner and disinfectant Fuzion is also running well ahead of management expectations.

Notably, in fiscal 2016, Clorox generated an incremental 2.7% sales growth from innovation. The company aims to generate about 3% from sales from innovation in upcoming years.

Clorox remains well positioned to drive category growth on the back of continued investments in product portfolios, e-commerce initiatives, and digital marketing. The company’s strong and innovative product pipeline planned for the second half of fiscal 2017 is likely to boost the segment’s results.

Outlook

Buoyed by a 4% rise in its top line during the first half of fiscal 2017, in addition to its strong product demand and broad innovation pipeline, Clorox has raised the lower end of its fiscal 2017 sales growth expectation. The management expects sales to rise 3%–4% in fiscal 2017, as compared to the earlier guidance of 2%–4% growth.

The company’s guidance also includes the negative impact of 1%–2% from adverse currency movement. Notably, analysts expect Clorox to report a 3.9% growth in sales for fiscal 2017.

Continue to the next part for a look at Clorox’s earnings.

Latest articles

On Tuesday, Tesla (TSLA) cut the prices of its vehicles to standardize its global car line-up, according to Reuters.

Yesterday, PayPal (PYPL) announced that it would expand Xoom, which is its international money transfer service, to 32 markets in Europe.

Visa stock has risen about 37% and has outperformed the S&P 500 Index so far in 2019.

16 Jul

What to Expect from Skechers’s Q2 Results

WRITTEN BY Sharon Bailey

Skechers (SKX) is set to declare its results for the second quarter after the markets close on July 18. Here's what you should know.

On Tuesday, Canadian Pacific Railway (CP) reported strong second-quarter earnings. The company's top and bottom lines touched a record mark.

16 Jul

What to Expect from Crown Castle's Q2 Results

WRITTEN BY Sushree Mohanty

Crown Castle International (CCI) is scheduled to announce its second-quarter earnings results on Wednesday after the market closes.