KEY POINTS

  • Clorox reported fiscal 4Q18 revenues of $1.69 billion, up 2.7% year over year and below the consensus estimate of $1.72 billion. Diluted EPS was $1.66, up 9.2% from the year-ago quarter and above the consensus estimate of $1.58.
  • Two out of the four business units showed positive sales growth for the quarter. Cleaning sales grew by 3%, while lifestyle sales grew by 21%—driven primarily by the Nutranext acquisition—while household sales were down by 3% and international sales were down by 2%.
  • Clorox provided fiscal year 2018 sales guidance of sales to be up 2%–4%, up from 3% in 3Q18 and raised the EPS to $6.32–$6.52, up from $6.15–$6.30 previously.

Fiscal 4Q18 Results

Clorox reported fiscal 4Q18 revenues of $1.69 billion, up 2.7% year over year and below the consensus estimate of $1.72 billion. Diluted EPS was $1.66, above the consensus estimate of $1.58 and up 9.2% from the year-ago quarter. Full-year sales grew 2.5% to $6.12 billion from $5.97 billion.

Overall sales grew by 2.7% during the quarter, and two of the company’s four business units saw sales increases during the period. For the year, all four of the business segments showed positive growth.

Cleaning segment: Sales in 4Q increased by 3%, with growth driven by gains in the company’s largest business unit, Home Care. Within Home Care, Clorox Disinfecting Wipes grew sales by double digits in 4Q following a price increase. Full-year sales also grew 3%. 

Lifestyle segment: Sales in the Lifestyle segment—which includes dressings and sauces, water filtration and natural personal care—increased by 21% from the year-ago quarter, reflecting the acquisition of Nutranext. On a full-year basis, sales increased by 8%, largely reflecting the acquisition of Nutranext.

Burt’s Bees: Sales for the quarter and for the year grew; the lip balm assumed the #1 market share position for the quarter and the total lip balm category for the first time, contributing to a record quarter in shipments for lip care. The company reported that its overall cosmetics launch is performing well in the market, and new liquid lipsticks are shipping and available in select stores. This form of lipstick comprises about 20% of the lipstick category today, and is growing at a double-digit rate. 

Food segment: Sales in the Food segment declined for the quarter, but increased for the year. The company’s Hidden Valley brand equity grew share for the 14th consecutive quarter, and the dry dressing business grew as a result of a focus on extending use as a seasoning and a recipe ingredient.

Household segment: Sales in this segment decreased 3%. On a full-year basis, sales came in flat. The sales decline in the Household segment was largely driven by charcoal; Q4 sales were down driven in part by colder weather earlier and lower merchandising levels at several retailers. 

International:  4Q sales decreased 2%, mainly reflecting unfavorable foreign-exchange headwinds. On a full-year basis, international sales grew by 2%. 

Outlook

Clorox raised its FY19 net sales growth guidance to 2%–4% from 3% previously, and raised its full-year EPS guidance range to $6.32–$6.52 from $6.17–$6.37 previously.


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