Clorox (NYSE:CLX) CEO Linda Rendle announced in a blog post that the company is on track to achieve its ongoing annual savings goal of about $75 million to $100 million. Meanwhile, the manufacturer of consumer and professional products will also be trimming approximately 4% of its nonproduction workforce, or about 200 jobs.
However, the company will employ some impacted employees in other areas of the business and close a few open positions.
Clorox’s volumes remain subdued, and the company expects the trend to continue into Q3. This will take a toll on the company’s overall revenues. However, benefits from higher pricing and cost-savings could continue to cushion margins.
The company is focusing on restoring its profitability to pre-pandemic levels. It increased pricing to counter input cost headwinds. Further, it implemented cost-saving initiatives to drive profitability.
During the Q2 conference call, Rendle said the company delivered a gross margin improvement of 320 basis points in Q2. Meanwhile, gross margins expanded by 100 basis points in the first six months of the current fiscal year. Rendle added that the ongoing improvements provide momentum to restore margins to pre-pandemic levels over time.
What’s the Prediction for Clorox Stock?
While the company’s margin expansion initiatives are likely to support margins, volume declines, commodity cost inflation, and investments in products and advertising could continue to pressure its earnings.
Clorox expects Fiscal 2023 adjusted EPS to either decline by 1% or increase by 5%. At the same time, its revenue is forecasted to either increase by 1% or decline by 2% due to the moderating demand for its cleaning and disinfecting products.
Given the near-term sales and earnings pressure, five analysts recommend a Sell on CLX stock. Five suggest a Hold, and one recommends a Buy. Overall, Clorox sports a Moderate Sell consensus rating on TipRanks. These analysts’ average price target of $142.20 reflects 12.73% upside potential.
