Clorox Scrubs Down Forecast

Clorox (CLX Quote - Cramer on CLX - Stock Picks) posted a 4.5% drop in second-quarter earnings as higher costs and charges offset a rise in sales.

The consumer-products giant also lowered its profit forecast for the year, noting that costs tied to a recent acquisition, as well as a divestiture plan, are expected to reach the high end of the company's expectation. Shares were sliding 3% Monday.

For the quarter ended Dec. 31, Clorox's earnings fell to $92 million from $96 million a year earlier. On a per-share basis, earnings climbed to 65 cents from 62 cents due to fewer shares outstanding.

Analysts, on average, predicted earnings of 54 cents a share.

Sales rose 8% to $1.19 billion from $1.10 billion a year earlier, exceeding Wall Street's $1.16 billion forecast. Favorable currency exchange rates and higher prices helped sales outpace volume, which rose 6%.

Volume was lifted by 1 percentage point from the acquisition of Burt's Bees, a natural cosmetics and personal-care line, last year. The purchase of a bleach business added another percentage point to volume.

Gross margin slid to 40.4% from 42%, which Clorox attributed to higher raw-material costs, increased promotional spending and higher manufacturing expenses.

For the fiscal year, Clorox now expects earnings of $3.20 to $3.35 a share, below its prior forecast of $3.33 to $3.50. Analysts see earnings of $3.31 a share.

The new outlook reflects greater costs tied to the Burt's Bees purchase, as well as additional restructuring-related charges from a decision to exit the private-label food bag business. Those offset a brighter outlook from the company's stronger-than-anticipated first-half results.

Shares of Clorox recently were down $1.94 to $61.15.