Clorox's Q1 Earnings Miss Estimates, FY22 Outlook Below Expectations Due to ERP Switch Disruptions.

Clorox's full-year outlook came in below expectations due to a switch in operational software disrupting retail orders. The company estimates a negative impact of up to 95 cents per share on earnings in the year ahead. Despite the short-term pain, Clorox believes the transformation will pay off with improved future performance. The company's shares have fallen 23% this year, lagging the S&P 500 Index.

July 2, 2025

The Clorox Company (NYSE: CLX) reported its fourth-quarter and fiscal year 2025 (FY25) results, which ended June 30, 2025. The company highlighted a strong margin expansion and adjusted EPS growth for FY25 despite a challenging environment in the second half of the fiscal year. However, the company's full-year outlook came in below expectations due to a switch in operational software disrupting retail orders. The company estimates a negative impact of up to 95 cents per share on earnings in the year ahead [1].

Key Results:

- Net sales increased by 4% to $2.0 billion, driven by incremental ERP shipments, partially offset by the divestiture of the VMS business and unfavorable price mix.
- Organic sales grew by 8%.
- Gross margin remained at 46.5%, primarily due to higher volume and cost savings, offset by manufacturing and logistics costs.
- Diluted net earnings per share (EPS) increased by 55% to $2.68, while adjusted EPS increased by 58% to $2.87.
- Net cash provided by operations was $981 million, up 41% from the previous year.

FY26 Outlook:

Despite the short-term pain, Clorox believes the transformation will pay off with improved future performance. The company expects retailers to draw down on the incremental inventory placed in advance of the ERP system transition, resulting in a potential reduction of up to 7 to 8 points in sales and up to 85 to 95 cents in EPS in FY26. This inventory draw-down is expected to reduce FY26 diluted EPS by about 29% to 32% and adjusted EPS by about 22% to 25% compared to the higher base in FY25 [1].

Market Performance:

Clorox's shares have fallen by 23% this year, lagging the S&P 500 Index. The company remains focused on operational excellence and driving category and market share improvements, with more work to do in implementing its long-term strategy and digital transformation [1].

References:

[1] The Clorox Company. (2025, July 31). Clorox Reports Q4 and FY25 Results, Provides FY26 Outlook. Retrieved from https://investors.thecloroxcompany.com/news/news-details/2025/Clorox-Reports-Q4-and-FY25-Results-Provides-FY26-Outlook/default.aspx