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MarketScreener Homepage  >  Equities  >  Nyse  >  The Clorox Company    CLX

THE CLOROX COMPANY

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Fortunes Flip for Makeup, Cleaning Supplies -- WSJ

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05/02/2020 | 02:48am EDT

By Sharon Terlep and Matt Grossman

Americans' dramatically altered spending habits amid the coronavirus pandemic upended financial results for some of the biggest consumer-products companies.

Clorox Co. and Colgate-Palmolive Co. on Friday reported soaring sales for the most recent period as people amassed cleaning products, soaps and vitamins. Meantime, beauty giant Estée Lauder Cos. reported an 11% sales decline and swung to a $6 million quarterly loss as global shutdowns cut off consumers' access to high-end beauty products from Clinique skin cream to M.A.C. makeup.

The results were reversals of fortune for Clorox and Estée Lauder in particular. Before the pandemic, Clorox had been struggling with tepid sales gains relative to rivals, and Estée Lauder was far outperforming its competitors.

Even companies experiencing sales increases amid the pandemic stressed uncertainty ahead.

"The unpredictability that we've seen across the world is unlike anything we've seen before, it's very difficult to get a line of sight on how things are going to unfold," Colgate Chief Executive Noel Wallace said in a call with analysts. "The biggest unknown for us is the degree of the recession all over the world."

Clorox, which posted its highest quarterly sales gain in 20 years, took the unusual step of increasing its forecast for the year, predicting both higher sales and profits. The company's brands include in-demand items from Clorox disinfectant wipes to Rainbow Light vitamins. Most of its sales are in the U.S., which largely insulated Clorox from the shutdown in China earlier this year and from currency volatility affecting rivals.

The company now expects to report year-over-year sales growth of 4% to 6%. In early February, the last time it offered such guidance, Clorox had said the year-to-year change in sales would be between 1% growth and a single-digit percentage decline.

Clorox said sales of its cleaning products, which includes wipes and bleaches, grew 32% year over year between January and March. Overall, the company's revenue increased 15% to $1.78 billion in the period, the third quarter of its fiscal year.

Colgate-Palmolive also reported a surge in demand. North American sales of personal- and home-care products, which include Colgate toothpaste and Softsoap hand soap, grew 8.9% in the period compared with the same time last year, the company said Friday. Overall, Colgate's first-quarter revenue grew 5.5% to $4.1 billion.

Estée Lauder, in turn, reported its weakest quarter since the recession, with sales down 11% to $3 billion for the latest quarter.

"Brick-and-mortar was completely closed and the consumer was shocked," in March, Estée Lauder CEO Fabrizio Freda said in a call with analysts.

Sales in Estée Lauder's Americas segment tumbled 23% as stores in North America and elsewhere remained closed because of the pandemic and lockdowns reduced demand for makeup and fragrances.

The New York-based cosmetics company said while many retail locations have been opening in Asian markets including China, where sales have begun to rebound, closures elsewhere continue to weigh on its overall results. Sales at airports and other duty-free shops, which are profit centers for the company, also continue to be hit hard by curtailed air travel globally.

Mr. Freda said the company expected a swath of retailers would never reopen, accelerating the beauty industry's shift online. Ultimately, he said, Estée Lauder was well-positioned to compete in such a shakeout, but the "transition is coming to be complex and difficult," he said.

Also reporting results on Friday was Newell Brands Inc., the maker of Crock Pots, Sharpie pens and other household products. The company said sales plunged 25% in April and significant disruptions are likely in the second quarter. Sales fell 7.6% to $1.89 billion in the March ended quarter and Newell posted a $1.28 billion net loss after recording a $1.5 billion impairment charge.

Newell said about 20 of its 135 manufacturing plants were temporarily closed in March or April because of the coronavirus pandemic, including a home fragrance factory in South Deerfield, Mass. The company has furloughed about 5,000 workers and temporarily closed its Yankee Candle retail stores in North America.

Newell withdrew its financial forecasts for the full year and second quarter. The Atlanta company said it was hopeful its business would improve in the second half of the year, but the pandemic's disruptions to consumer demand and its supply chain make it too difficult to set targets.

Newell CEO Ravi Saligram told analysts he was "heartened" by early signs that business was picking up and the company had resumed more regular production. He said he expected sales would improve throughout the year and anticipated workers would return to offices this summer and students will be in school by fall.

Colgate also withdrew its guidance for the 2020 calendar year, citing uncertainty around the virus and the economy. Mr. Wallace, the CEO, said further coronavirus-related shutdowns, potential production interruptions, currency volatility and the worsening economy could threaten growth.

Write to Sharon Terlep at sharon.terlep@wsj.com and Matt Grossman at matt.grossman@wsj.com

 

Stocks mentioned in the article
ChangeLast1st jan.
ACCESS CO., LTD. -1.49% 926 End-of-day quote.-3.04%
CHANGE INC. 3.17% 8140 End-of-day quote.179.92%
COLGATE-PALMOLIVE COMPANY 0.16% 73.425 Delayed Quote.6.51%
SHIFT, INC. 13.90% 12780 End-of-day quote.60.15%
THE CLOROX COMPANY 0.25% 230.07 Delayed Quote.49.47%
THE ESTÉE LAUDER COMPANIES INC. 0.18% 188.16 Delayed Quote.-9.07%
THE GLOBAL LTD. -3.30% 205 End-of-day quote.-56.48%
THE NEW HOME COMPANY INC. 0.81% 3.2662 Delayed Quote.-30.47%
WORLD CO., LTD. -5.40% 1420 End-of-day quote.-47.23%
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Financials (USD)
Sales 2020 6 576 M - -
Net income 2020 884 M - -
Net Debt 2020 2 405 M - -
P/E ratio 2020 33,2x
Yield 2020 1,83%
Capitalization 28 902 M 28 902 M -
EV / Sales 2019
EV / Sales 2020 4,76x
Nbr of Employees 8 800
Free-Float 79,2%
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Mean consensus HOLD
Number of Analysts 16
Average target price 199,75 $
Last Close Price 229,50 $
Spread / Highest target 15,0%
Spread / Average Target -13,0%
Spread / Lowest Target -35,1%
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Benno O. Dorer Chairman & Chief Executive Officer
Linda Rendle President
Kevin Jacobsen Chief Financial Officer & Executive Vice President
Richard H. Carmona Independent Director
Pamela A. Thomas-Graham Lead Independent Director
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