Clorox Cuts Trashbag Prices; Sees Early FY10 Pressures

Clorox Co. (CLX) said it is rolling back prices for its key line of Glad trashbags for the second time in recent months and expects sales and volumes to stay under pressure from weak global economies in the first half of its fiscal 2010.

On a conference call, the maker of household products said it is rolling back prices on its Glad trashbags by 7% effective May 1 to compete better in the category as prices of some commodities have come down. Cheaper private-label brands have been gaining market share, particularly in commoditized sectors like trash bags. Pricing has been closely watched by investors who have been concerned that margins at the big national brands could be hurt by price rollbacks.

The company said its wipes business could see greater usage by consumers due to concerns about swine flu. The company said it is highlighting the benefits of its bleach and related products to consumers.

Clorox expects global financial and consumer markets to remain significantly pressured through the first half of its fiscal 2010 with an economic recovery beginning in the U.S. in the second half of its fiscal year, which ends in June. The company expects that recovery to be very modest and said recovery in international markets will likely lag the U.S.

For fiscal 2010, Clorox said it expects sales growth of 1% to 2%. Analysts polled by Thomson Financial expect earnings of $4.21 a share for the period and sales of $5.6 billion.

The company expects its sales and volume to be pressured in the first half of its fiscal year due to the recession, foreign-exchange translation and other factors. The company said it could consider buybacks or small deals in mid fiscal 2010 once it has lowered debt to appropriate levels.

Clorox is projecting higher advertising spending in the current fourth quarter, which ends in June.

Earlier Friday, Clorox said its fiscal third-quarter profit jumped 53% on price increases and lower costs.

-By Anjali Cordeiro, Dow Jones Newswires; 201-938-2408; [e-mail]