Q3 results missed expectations due to slower improvement
Clorox reported a mixed Q3 that missed expectations due to higher supply chain costs and delayed savings from the ERP stabilization. Management is guiding Q4 gross margins down significantly due to one-time Gojo-related items and rising oil prices from the Middle East conflict, but remains confident in the long-term strategy of innovation and distribution gains. Q3 results were mixed and fell short of expectations, with slower improvement in some businesses and higher-than-expected supply chain costs.
Вывод BuzzbergQ3 results missed expectations due to slower improvementClorox reported a mixed Q3 that missed expectations due to higher supply chain costs and delayed savings from the ERP stabilization. Management is guiding Q4 gross margins down significantly due to one-time Gojo-related items and rising oil prices from the Middle East conflict, but remains confident in the long-term strategy of innovation and distribution gains. Q3 results were mixed and fell short of expectations, with slower improvement in some businesses and higher-than-expected supply chain costs.Читать полный анализСвернуть анализ
Clorox reported a mixed Q3 that missed expectations due to higher supply chain costs and delayed savings from the ERP stabilization. Management is guiding Q4 gross margins down significantly due to one-time Gojo-related items and rising oil prices from the Middle East conflict, but remains confident in the long-term strategy of innovation and distribution gains. Q3 results were mixed and fell short of expectations, with slower improvement in some businesses and higher-than-expected supply chain costs.
Gross margin was pressured by ERP stabilization costs and delayed cost savings, which are now abating.
Q4 guidance implies ~500bps gross margin decline YoY, driven by ERP lapping, Gojo integration, and Middle East energy costs.
Management is assuming $100/barrel oil in Q4, a $20-25M headwind, with no mitigations yet.
GOJO revenue$0.2B
reported
Revenue$1.67B
-0% QoQ
EPS$1.64
+18% QoQ
Gross margin43.23%
reported
Что изменилось в этом квартале
01
Guidance
Q3 results missed expectations due to slower improvement
Guidance tone
02
Operations
ERP implementation complete, focus shifts to execution
Q3 results were mixed and fell short of expectations, with slower improvement in some businesses and higher-than-expected supply chain costs.
03
Portfolio
Litter business undergoing fundamental reinvention with multi-year process
Gross margin was pressured by ERP stabilization costs and delayed cost savings, which are now abating.
04
Margins
Oil price headwinds expected to be about 30 bps gross margin in Q4
Reported gross margin was 43.23%, reinforcing the quarter's better-than-guided profitability.
Спрос и капзатраты
Спрос
Заказы и конверсия
Management's tone is cautious and neutral, acknowledging missed expectations in Q3 due to supply chain costs and delayed savings, while expressing confidence in the long-term path forward with innovation and distribution gains.
Капзатраты
Инвестиции и мощности
Management mentioned accelerating a large supply chain cost-saving project to position for fiscal year 2027, but did not disclose specific capex figures.
Тон · Measured
Management acknowledged shortfalls and slower-than-expected progress but expressed confidence in the long-term strategy and execution improvements.
Альфа цепочки поставок
A1
The ERP implementation is complete, but the stabilization costs lingered longer than planned, leading to inflated logistics and fulfillment costs in Q3. However, these costs are now minimal as of the end of the quarter, suggesting a potential margin tailwind in Q4.
“And those costs are mostly in the area of logistic and fulfillment. So think about cost of expediting orders, additional costs moving around inventory more than you should, less than optimal transportation costs, and incremental labor cost…”
Clorox is seeing a significant impact from higher oil prices due to the Middle East conflict, assuming $100/barrel for Q4, resulting in a $20-25M headwind (~30bps gross margin). This is a full-impact number with no mitigations yet, implying a larger run-rate impact that will need to be addressed in FY27.
“Right now, we're assuming about $100 per barrel would be the midpoint for estimating in Q4, which is about between $20 and $25 million of headwinds, or about under 30 basis point of gross margin. So that gives you a point of reference.”
The company is accelerating a large structural supply chain cost-saving project into FY27, incurring a one-time cost of ~50bps in Q4 to fund it. This suggests that despite cost pressures, there is a pipeline of productivity initiatives to offset inflation.
“I think we necessitated with some one time expenses related to a large cost saving projects that we're accelerating into fiscal year 27. So that's the that's the bulk of the difference between our prior outlook and the current outlook.”