The Clorox Company saw its stock drop approximately 9.6% to $87.11 on Friday after the consumer products giant reduced its fiscal 2026 profit forecast. The company attributed the downward revision to rising energy expenses, inventory timing issues, and costs associated with its recent acquisition of GOJO Industries, the maker of Purell hand sanitizer.
Clorox now expects adjusted earnings per share (EPS) for fiscal 2026 to be in the range of $5.45 to $5.65, down from the previous guidance of $5.95 to $6.30. Diluted EPS is projected at $4.78 to $4.98. Organic sales, which exclude acquisitions, divestitures, and currency fluctuations, are forecast to decline approximately 9%.
The outlook cut reflects broader pressures facing household-products makers as consumers become more price-sensitive while input costs for fuel, freight, and commodities remain elevated. Geopolitical tensions in the Middle East have added to cost pressures, prompting companies like Clorox to reassess pricing and expense strategies. On Friday, Colgate-Palmolive flagged an additional $300 million in raw material and logistics costs due to the turmoil, and Procter & Gamble has also signaled a significant profit squeeze from higher oil prices.
For the third quarter ended March 31, Clorox reported flat sales of $1.67 billion. Adjusted EPS rose 13% to $1.64, supported by cost controls and reduced advertising and administrative spending. However, gross margin contracted 140 basis points to 43.2%, reflecting the impact of higher costs. The company noted that the quarter was “mixed,” with several business segments lagging in regaining market share.
Clorox is navigating internal challenges as well. The company completed the third and final phase of its U.S. ERP system rollout, but costs to stabilize the new system have exceeded expectations. Additionally, the GOJO acquisition, completed on April 1, is expected to contribute about $200 million in sales in the fourth quarter and nearly three percentage points to fiscal 2026 sales, but will reduce adjusted EPS by 2 to 4 cents.
Chief Financial Officer Luc Bellet told analysts that Clorox is budgeting for oil at around $100 per barrel in the fourth quarter, which would add $20 million to $25 million in costs and shave roughly 130 basis points off gross margin. “It’s very hard to predict what might happen,” Bellet said, highlighting the uncertainty around energy prices.
Consumer behavior is also shifting. Higher-income shoppers are gravitating toward larger pack sizes and club stores, while lower-income consumers are choosing smaller, less expensive options. This divergence affects Clorox’s portfolio, which includes brands such as Glad, Brita, Burt’s Bees, Fresh Step, Hidden Valley, and Kingsford. Management noted that shelf space and promotional strategies are critical in determining whether shoppers stick with branded goods or trade down.
Segment performance varied. Household sales rose 3%, driven by cat litter and grilling products. Lifestyle sales fell 9%, impacted by lower consumption and retail inventory adjustments. International sales increased 8%, supported by volume and favorable currency. Health and Wellness sales were essentially flat.
Looking ahead, Clorox expects organic sales to drop about 13% in the fourth quarter, largely due to last year’s ERP-related shipment timing. The company plans to maintain brand support at roughly 11% of net sales for advertising and sales promotion. While the outlook may prove cautious if oil prices decline, ERP issues resolve, and the Purell integration proceeds smoothly, persistent consumer caution and potential promotional wars could extend margin pressure into fiscal 2027.
