Clorox Q2 Earnings Miss Estimates, Lower Organic Sales Hurt

Core Insights - The Clorox Company (CLX) reported mixed second-quarter fiscal 2026 results, with adjusted earnings per share (EPS) of $1.39, missing the Zacks Consensus Estimate of $1.43, and net sales of $1.67 billion, which beat the consensus mark of $1.63 billion but decreased 1% year over year [1][4][11]. Financial Performance - Adjusted EPS decreased by 10% from $1.55 in the same quarter last year [3]. - Net sales fell 1% year over year, primarily due to lower consumption, although shipments ahead of consumption partially offset this decline [4]. - Gross profit declined 2.2% year over year to $722 million, with gross margin contracting by 60 basis points to 43.2% due to elevated manufacturing and logistics costs [5]. Segment Analysis - Health and Wellness segment sales grew 2% year over year to $643 million, driven by increased volumes from ERP transition shipments [6]. - Household segment sales decreased by 6% year over year to $419 million, impacted by lower volume and negative price mix [7]. - Lifestyle segment sales tumbled 5% year over year to $321 million, reflecting reduced consumption [8]. - International segment saw a 7% rise in net sales to $294 million, with organic sales growing 5% [9]. Financial Position - Clorox ended the quarter with cash and cash equivalents of $227 million and long-term debt of $2.49 billion [10]. Guidance for FY26 - Management maintained the outlook for net sales, gross margin, and adjusted EPS for fiscal 2026, expecting a decline in net sales of 6-10% compared to the prior year [12][13]. - The anticipated decline in EPS is between $5.60 and $5.95, reflecting a year-over-year decrease of 14-9% [16]. - Adjusted EPS is projected to be between $5.95 and $6.30, indicating a decline of 23-18% from the previous year [17].