Clorox Earnings Fall Amid Higher Spending

Clorox Co. said earnings fell 14% in the latest quarter, hurt by higher spending on investments in the company's brands as it tries to fuel growth through product innovation and more marketing.

The company also said Wednesday it expects full-year earnings between $5.38 to $5.58 in its new year that started in July on 2% to 4% sales growth. Analysts polled by Thomson Reuters expected $5.22 a share.

For the three months ended in June, advertising costs rose 27% compared with the prior-year period while research and development costs rose 7.8%.

"In the short term, this deliberate choice paid off in top-line increases in an environment where such growth is hard to come by," said Chief Executive Benno Dorer, adding that the company believes the investments will also boost the long-term health of the company.

The maker of a range of consumer products including liquid bleach, disinfecting wipes and Glad trash bags has seen sales climb in recent quarters and its margins have expanded amid favorable commodity costs, cost savings and price increases. But in the latest period, the company said those positive effects were more than offset by higher manufacturing and logistics costs, unfavorable mix, one-time integration costs related to its RenewLife acquisition and higher trade promotion spending. Gross margin was 45.4%, from 45.6% for the quarter.

Over all, Clorox posted a profit of $165 million, or $1.26 a share, down from $191 million, or $1.46 a share, in the prior-year quarter.

Analysts surveyed by Thomson Reuters forecast per-share earnings of $1.28 a share, according to FactSet. Revenue rose 2.8% to $1.6 billion. Analysts projected revenue of $1.65 billion.

Shares were inactive premarket.

Write to Joshua Jamerson at [e-mail]

(END) Dow Jones Newswires

August 03, 2016 09:15 ET (13:15 GMT)

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