The Clorox Company (CLX) recorded 7.8% growth in fiscal third-quarter earnings, to $165 million from $153 million in the year-ago quarter. Earnings per share came in at $1.16, which topped the Zacks Consensus Estimate by 8 cents.

Net sales for the quarter rose by 1.2% to $1.37 billion from $1.35 billion in the year-ago period. The growth was primarily driven by price increases and favorable foreign currency translations, which was partially offset by Venezuela currency devaluation. Total volume increased 3%, primarily due to several major brands including Clorox disinfecting wipes, Hidden Valley salad dressings, Fresh Step cat litter, Kingsford charcoal and disinfecting and fragranced cleaning products in Latin America.


In the Cleaning segment, sales declined 4% while volumes grew 1%. The volume increase was driven by increased shipments of disinfecting wipes and Pine-Sol cleaner.

However, sales declined due to unfavorable product mix and increased trade-promotion spending.
In the Household segment, sales were flat year-over-year, although volumes increased 4%. Volume growth was primarily driven by robust shipments of Fresh Step cat litter and increased shipments of Kingsford charcoal and Glad trash bags.

The Lifestyle segment recorded 5% sales growth and 8% volume growth. The volume growth was driven by Hidden Valley salad dressings, increased shipments of Brita pour-through water-filtration products and Burt’s Bees natural personal care products.

In the International segment, sales expanded 9% and volumes grew by 3% year-over-year. Volume growth was driven by higher shipments of disinfecting and fragranced cleaning products in Latin America.

Balance Sheet

Clorox’s gross margin for the quarter was almost flat year-over-year declining marginally by 6 basis points (bps) to 45.1% versus 45.2% in the year-ago quarter. The benefits of cost savings were fully offset by higher commodity costs and trade spending. Operating margin rose by 43 bps to 13.3% from 12.9% in the prior-year period.

At quarter-end, Clorox had cash and cash equivalents of $241 million, compared to $206 million in the year-ago quarter.


Clorox has updated its guidance for fiscal 2010. Annual earnings are now expected in the range of $4.20 to $4.25 per share, compared to the previous guidance of $4.10 to $4.25.

Net sales growth for the year is reiterated in the 1% to 2% range, while gross margins are now expected to improve in the 150 to 160 bps range, compared to the earlier prediction of a 150 to 175 bps improvement.
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