Clorox Forecasts Sales Rebound After ERP Drag
Fourth-quarter net sales fell 2% to $1.95 billion as an inventory drawdown offset the GOJO acquisition.
Clorox Co. (CLX), the consumer-products maker, reported a 13% decline in fourth-quarter organic sales as it lapped shipments tied to its U.S. enterprise-resource-planning rollout.
The quarter marked the first inclusion of GOJO, the maker of Purell and other health-and-hygiene products, following Clorox's April acquisition. GOJO contributed about 10 percentage points of quarterly sales growth, and the expanded health-and-hygiene portfolio represented more than half of company sales.
Diluted earnings fell 50% to $1.34 a share, while adjusted earnings dropped 42% to $1.66 a share. The comparison with ERP-related shipments cut adjusted earnings by about 90 cents a share. For fiscal 2026, sales declined 5% to $6.72 billion and adjusted earnings fell 28% to $5.53 a share.
Health and Wellness sales rose 16%, though GOJO supplied about 28 percentage points of growth and the segment's organic sales declined 12%. Household sales fell 18% and Lifestyle sales dropped 17%, pushing adjusted operating profit down 56% and 60%, respectively. International was the only segment with organic growth, posting a 1% increase.
Lower volume and higher commodity, manufacturing and logistics costs compounded the shipment comparison. Fourth-quarter gross margin narrowed to 41.3% from 46.5%, with the ERP comparison and GOJO inventory step-up each reducing the measure by about 150 basis points. Full-year operating cash flow fell 38% to $612 million, primarily because of a payment to terminate the Glad Venture Agreement.
Clorox expects fiscal 2027 net sales to grow 13% to 14%, reversing the prior year's decline, with GOJO contributing about 9.5 percentage points. Organic sales are forecast to rise 3.5% to 4.5%, including more than 3.5 points from lapping the ERP inventory drawdown. Adjusted earnings are expected at $5.70 to $6.00 a share, an increase of 3% to 8%.
Margin pressure is expected to persist despite the sales rebound. Clorox forecasts gross margin of about 42%, roughly flat to slightly below fiscal 2026, as inflation and unfavorable mix outweigh cost savings. The company completed its five-year digital transformation after about $580 million of incremental investment and reorganized its business units under Chief Operating Officer Chris Hyder, while Nina Barton took responsibility for enterprise growth, innovation and portfolio strategy.