Clorox (CLX -0.59%) investors were seeing red on Wednesday morning. The consumer staples stock fell 6% in early morning trading while the S&P 500 declined just 0.3%. That drop added to a tough period for shareholders, with Clorox down 16% in the past full year compared to a 20% surge in the wider market.
Wednesday's early decline came after management updated its 2024 outlook following another tough quarter on sales.
Sales are down
Clorox said in a premarket earnings report that sales fell in the fiscal third-quarter period that ran through late March, mainly due to a cyberattack that disrupted its distribution network. Revenue declined 5% and organic sales rose 2%. These metrics were up 16% and 20% in the previous quarter, respectively.
While Wall Street focused on that growth shift, management sought to highlight the company's improving earnings. Gross profit margin ticked higher as Clorox made progress in its cost-cutting projects. These wins powered a 13% boost in adjusted earnings despite higher manufacturing costs and reduced sales volumes. "We made significant progress on our long-term strategies to drive profitable growth," CEO Linda Rendle said in a press release.
Lowered expectations
Clorox reduced a few parts of its 2024 outlook, adding more pressure to the stock. Management sees sales landing at the lower end of the estimate range it updated in early February. Earnings will similarly grow a bit slower than originally planned due to the sluggish fiscal Q3 results.
These updates don't threaten the rebound growth picture for Clorox, but they do suggest that the company is still facing demand headwinds as organic sales rise just slightly in fiscal 2024. The good news is investors can expect to see rising profit margins for the year while they wait for signs of accelerating growth ahead.
