Clorox’s top line missed expectations
Clorox (CLX) reported sales of $1.4 billion in fiscal 2Q18,[1. fiscal 2Q18 ended December 31, 2017] which fell short of analysts’ expectations. However, its sales increased ~1.0% on a YoY (year-over-year) basis. Although the company’s top line growth rate seemed low, it faced tough YoY comparisons for the quarter.
In fiscal 2Q17, Clorox reported volume gains of 8.0%, and its sales improved about 5.0%. The company’s sales were also affected by the divestiture of the Aplicare business.
Fiscal 2Q18 sales details
Clorox’s (CLX) top line benefited from gains in its Lifestyle, International, and Cleaning segment. The company’s volumes marked a YoY improvement, thanks to its differentiated offerings and marketing efforts. Its ability to restructure pricing also boosted the growth rate of its top line.
However, the divestiture of the Aplicare business adversely impacted the company’s sales growth rate by ~1.0%. An unfavorable mix, driven by increased club channel shipments, subdued its growth.
Other negative impacts on the company’s top line growth included retailers reducing inventory and lower shipments due to carrier capacity constraints following the hurricanes.
Clorox’s (CLX) peers saw top-line growth from improved volumes, driven by new product launches and favorable currency rates. However, lower net price realization due to increased competition remained a drag. Procter & Gamble’s (PG) fiscal 2Q18 sales increased 3.2%, driven by improved volumes. However, lower pricing and adverse mix lowered the growth rate of the company’s top line.
Clorox reiterated its guidance and expects its top line to grow 1.0%–3.0% in fiscal 2018. This forecast includes ~3.0% of the incremental benefit from new product launches.
Pricing is likely to contribute positively to Clorox’s overall sales growth rate. However, the divestiture of Aplicare business is expected to be a 1.0% drag on its sales growth rate.