Clorox Forecasts Drop in Annual Sales as Ppandemic Boom Fades, Shares Fall(Reuters) -Clorox Co signaled on Tuesday that the pandemic-driven boom in demand for its bleaches, wipes and other surface cleaners was fading due to vaccinations and easing COVID-19 curbs, sending its shares down 12%.
The company forecast fiscal 2022 sales to fall between 2% and 6%, while analysts expected a decline of 1%, according to Refinitiv IBES data.
Like Procter & Gamble Co and Britain’s Reckitt Benckiser Group Plc, Clorox had benefited from consumers stockpiling cleaning products at the height of the pandemic last year.
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But with the opening up of the economy, sales in its mainstay health and wellness unit slumped 17% in the fourth quarter. The household business, which makes Glad trash bags and Kingston charcoal, reported an 8% drop in sales.
“This was a poor quarter,” said Edward Jones analyst John Boylan. He added that while the brokerage expected the first half to be difficult due to tough year-ago comparables, normalization of sales and profit would take longer than its initial estimations.
Clorox’s results also took a hit from rising costs of raw materials, such as pulp, resin and petrochemical products, that have prompted companies across sectors to increase prices.
Despite a price hike earlier in 2021, its gross margins declined by 970 basis points to 37.1%. That, in part, pulled down its adjusted earnings to 95 cents per share, which missed expectations of $1.35 per share.
Total net sales fell to $1.80 billion from $1.98 billion, falling short of estimates of $1.92 billion.
(Reporting by Mehr Bedi in Bengaluru, Additional reporting by Siddharth Cavale; Editing by Saumyadeb Chakrabarty and Aditya Soni)