Clorox Q1 Earnings Beat Estimates, Organic Sales Fall 17% Y/Y

The Clorox Company CLX reported first-quarter fiscal 2026 results, wherein both the top and bottom lines beat the Zacks Consensus Estimate but decreased on a year-over-year basis. Also, organic sales fell year over year.During the reported quarter, the company reached a key milestone in its transformation journey with the successful launch of its new enterprise resource planning (ERP) system in the U.S. The move has bolstered its digital backbone and opened new value streams. While the transition is now challenging, the company is focused on resilience and adaptability, navigating effectively with the benefits of ramping up the operations.Shares of this current Zacks Rank #5 (Strong Sell) company have lost 21.1% in the past six months compared with the industry’s 10.2% decline.Taking a Sneak Peek at CLX’s Quarterly PerformanceThe company posted adjusted earnings of 85 cents per share, which beat the Zacks Consensus Estimate of 78 cents. This represents a 54% decrease from $1.86 per share in the same quarter last year on soft net sales related to the ERP transition.Net sales of $1.43 billion dipped 19% from the year-ago quarter, mainly due to lower shipments with respect to the ERP transition. Organic sales dropped 17%, owing to lower volumes associated with its ERP transition. However, the metric beat the consensus mark of $1.38 billion.The Clorox Company Price, Consensus and EPS Surprise The Clorox Company price-consensus-eps-surprise-chart | The Clorox Company QuoteGross profit plunged 26.1% year over year to $596 million. We note that the gross margin contracted 410 basis points (bps) year over year to 41.7%, thanks to reduced volumes and elevated manufacturing and logistics costs, partly offset by cost savings.Discussion on SegmentsSales of the Health and Wellness segment fell 19% year over year to $565 million, reflecting a 16-point decrease in volume and a three-point unfavorable price mix. Our model predicted segment sales of $516.5 million.  Volumes fell on lower shipments and price mix was owing to solid shipments to the Club channel. The segment adjusted EBIT plunged 47% on soft sales, and elevated manufacturing and logistics costs.The Household segment reported a 19% year-over-year decrease in net sales to $362 million, due to a one-point unfavorable price mix and lower volumes. Our model predicted sales of $362.1 million for the segment. Segment adjusted EBIT slipped 55%, mainly due to weak sales.Sales in the Lifestyle segment tumbled 23% year over year to $245 million, reflecting a one-point negative price mix and lower volumes. We expected net sales of $265.5 million for the segment. Segment adjusted EBIT decreased 42%, primarily due to lower sales, somewhat offset by reduced advertising investments year over year.The International segment saw a 2% drop in net sales of $253 million, due to lower volumes and shipments associated with the ERP transition. Organic sales also fell 2%. We expected net sales of $253.8 million for the segment. Segment adjusted EBIT plunged 46%, mainly due to increased manufacturing and logistics costs.Clorox's Financial UpdateClorox ended the quarter with cash and cash equivalents of $166 million, long-term debt of $2.49 billion and stockholders’ deficit equity of $22 million, excluding the non-controlling interest of $160 million.Guidance for FY26Management is maintaining fiscal 2026 outlook for net sales, gross margin and adjusted EPS. The impact of the order fulfillment headwinds seen earlier in the year caused consumption and market share losses, trimming the company's current projections toward the lower end of the range. This also indicates slightly lower input costs and a solid demand creation plan to boost share and sales growth in the second half.Net sales are still expected to decline 6-10% compared with the prior year. This projection includes less than one percentage point of negative impact from the divestiture of the VMS business and changes in foreign exchange rates. Organic sales are anticipated to decrease 5-9%, largely caused by a 7.5 percentage point decline due to the reversal of incremental shipments made in the previous year as part of the ERP transition.The gross margin is projected to decline 50-100 bps. A significant portion of this decline, approximately 100 basis points, is attributed to the reversal of the prior year’s ERP-related shipment impact.Selling and administrative expenses are expected to account for roughly 16% of net sales. This includes an estimated 90 bps impact from the company’s ongoing strategic investments in digital capabilities and productivity improvements. Spending on advertising and sales promotion is projected to be approximately 11% of net sales, underscoring the company’s continued commitment to supporting its brands.Earnings per share (EPS) are anticipated to be between $5.60 and $5.95, representing a year-over-year decrease of 9-14%. This guidance includes a negative impact of approximately 90 cents per share, stemming from the reversal of incremental shipments associated with the ERP transition in the prior year.Adjusted EPS is still envisioned to be between $5.95 and $6.30, indicating a decline of 18-23% from the previous year. This figure excludes the estimated 35 cents per share impact from long-term investments in digital capabilities and productivity enhancements, while accounting for the 90 cents per share negative impact related to the ERP-related shipment reversal.Stocks to Consider in the Consumer Staples SpaceUnited Natural Foods UNFI is a key distributor of natural, organic and specialty food and non-food products. It currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here. The Zacks Consensus Estimate for United Natural Foods' current financial-year sales and earnings indicates growth of 1% and 167.6%, respectively, from the prior-year levels. UNFI delivered a trailing four-quarter earnings surprise of 416.2%, on average.Celsius Holdings, Inc. CELH, which specializes in nutritional functional foods, beverages and dietary supplements, starches and nutrition ingredients, currently sports a Zacks Rank #2 (Buy).The Zacks Consensus Estimate for Celsius’ current financial-year earnings is expected to rise 60% from the corresponding year-ago reported figure. CELH delivered a trailing four-quarter earnings surprise of 5.4%, on average.Post Holdings POST, which is a consumer-packaged goods holding company, currently carries a Zacks Rank of 2. POST delivered a trailing four-quarter earnings surprise of 21.4%, on average. The Zacks Consensus Estimate for Post Holdings’ current financial-year earnings indicates growth of 12.8% from the year-ago number. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report The Clorox Company (CLX): Free Stock Analysis Report United Natural Foods, Inc. (UNFI): Free Stock Analysis Report Post Holdings, Inc. (POST): Free Stock Analysis Report Celsius Holdings Inc. (CELH): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks