Clorox Beats Fiscal Q1 Estimates on Easy Comparison and Cost Savings, but Guides Toward Low End of EPS Range

CLX reported fiscal first-quarter 2027 net sales of $1.91 billion, up 33.3% year over year, and adjusted EPS of $1.55 versus $0.85 a year earlier. That topped the Zacks consensus of $0.97 by 59.79% and the $1.87 billion revenue estimate by 1.73%; MarketBeat, using a $1.07 consensus, put the beat at $0.48 per share. On a GAAP basis, diluted EPS was $1.39, according to the company's release.

The headline growth rates flatter the underlying trend. Clorox said the GOJO acquisition, completed April 1, added about 15 points to sales, and that organic sales growth of 18% reflected lapping an ERP transition-related inventory drawdown in the year-ago quarter, an effect worth about 90 cents of the year-ago EPS comparison. Health and Wellness net sales rose 62.5% to $918 million, with GOJO contributing about 39 points, while the segment's organic growth of 23% came in below the 33% average estimate. Gross margin fell 130 basis points to 40.4% on higher commodity, manufacturing and logistics costs. Clorox described the period as one of the strongest quarters of cost savings on record, and said the adjusted EPS gain was driven by higher sales, cost savings and a lower tax rate.

The outlook was more cautious than the quarter. Clorox maintained fiscal 2027 adjusted EPS guidance of $5.70 to $6.00 but now expects results closer to the low end, lowered its gross margin outlook to about 41.5%, and raised its input-cost inflation estimate to about $240 million. Excluding the ERP lap, management expects full-year organic growth of flat to up 1%, and it said it has line of sight to at least $50 million of GOJO cost synergies, mostly arriving later. CEO Linda Rendle described the cost environment as more challenging and credited part of the quarter to timing benefits.

What to watch: second-quarter organic sales, which management guided to flat to down 2% on the call, the pace of GOJO synergy capture, and the CEO transition on January 5, when Fabian Garcia succeeds Rendle. Zacks rates the stock #4 (Sell).