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Clorox Co - Stock Quote CLX

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Morningstar's Clorox Co Stock Analysis

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A Torrent of Transitory Cost Pressures Continue to Strangle Clorox's Profits; Shares Attractive

Erin Lash, CFA Sector Director

Analyst Note

| Erin Lash, CFA |

The foremost concern ahead of Clorox’s fiscal 2022 third-quarter print was the extent to which inflationary pressures would affect its gross margin. And despite posting a 760-basis-point degradation in gross margin (reflecting a 410-basis-point contraction stemming from commodities and 570 basis points from manufacturing and logistics), the 35.9% posted was nearly 300 basis points above the prior quarter, suggesting Clorox’s efforts to increase prices and reduce inefficiencies (a 270-basis-point benefit in aggregate this quarter) to dull the profit hit are starting to gain traction. We view this as particularly encouraging against a backdrop whereby cost pressures are being exacerbated by the crisis in Ukraine. The volatile global political and economic environment prompted Clorox to now guide for an 800-basis-point pullback in its fiscal 2022 gross margin due to $530 million in incremental commodity, manufacturing, and logistics costs, $30 million above previous expectations.

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Clorox Co's Company Profile

Business Description

With a history dating back more than 100 years, Clorox now plays in a variety of categories across the consumer products space, including cleaning supplies, laundry care, trash bags, cat litter, charcoal, food dressings, water-filtration products, and natural personal-care products. Beyond its namesake brand, the firm’s portfolio includes Liquid-Plumr, Pine-Sol, S.O.S, Tilex, Kingsford, Fresh Step, Glad, Hidden Valley, KC Masterpiece, Brita, and Burt’s Bees. Just shy of 85% of Clorox’s sales stem from its home turf.

Contact
1221 Broadway
Oakland, CA, 94612-1888
T +1 510 271-7000
Sector Consumer Defensive
Industry Household & Personal Products
Most Recent Earnings Mar 31, 2022
Fiscal Year End Jun 30, 2022
Stock Type Slow Growth
Employees 9,000

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