Clorox cuts FY24 adjusted EPS view to $4.30-$4.80, consensus $4.59

Prior view was $5.60-$5.90. Net sales are now expected to be down mid- to high single digits, updated to reflect the impact from the cyberattack. This compares to the previous expectation of sales that are flat to up 2%. This continues to reflect about 2 points of unfavorable impact from foreign exchange rates. Gross margin is now expected to be about flat, reflecting the combined benefit of pricing actions, cost savings and supply chain optimization offset by input cost inflation and the impact from the cyberattack. This compares to the previous expectation of an increase between 150 and 175 basis points. Selling and administrative expenses are now expected to be about 16% of net sales, including about 2 points of impact related to investments to enhance the company’s digital capabilities, implementation of the streamlined operating model and expenses resulting from the cyberattack. This compares to the previous expectation of between 15% and 16% of net sales. Advertising and sales promotion spending is expected to be about 11% of net sales. This continues to reflect the company’s stepped-up efforts to emphasize the superior value of its brands at a time when consumers are increasingly becoming more value focused as well as to support efforts to rebuild market share. The company’s effective tax rate is now expected to be between 23% and 24%, compared to the previous expectation of about 24%. Net of these factors, fiscal year diluted EPS is now expected to be between $2.10 and $2.60, or an increase of 75% to 117%, respectively. This compares to previous expectations between $4.65 and $4.95, or an increase of 290% to 316%, respectively. Adjusted EPS is now expected to be between $4.30 and $4.80, or a decrease of 16% to 6%.This compares to previous expectations of between $5.60 and $5.90, or an increase of 10% to 16%, respectively. Adjusted EPS excludes the long-term strategic investments in digital capabilities and productivity enhancements, which continue to be estimated at about 70 cents; a 25-cent charge related to the streamlined operating model; and incremental charges resulting from the cyberattack of about 25 cents. It also excludes a noncash charge of about $1.00 related to termination of the company’s domestic qualified pension plan.