Sales of Clorox, the market-leading disinfectant now in the front line of the fight against COVID-19, jumped 18% during the fiscal third quarter of its producer, The Clorox Company, based in Oakland, California. Sales volumes were flat in Q2, which was before the COVID-19 pandemic began sweeping the world.
The company said the sales boost was due to surging sales for its Clorox branded bleaches, disinfecting wipes and sprays. It generated $806 million worth of operating cash over the past nine months, up more than 34% year-on-year. Earnings surged by an even larger total, with gross profit margin jumping to 46.7% of sales compared to 43.4% year-on-year.
"Beyond the extraordinary growth in our disinfecting products, we saw broad-based growth across all four segments as our portfolio is uniquely positioned to serve consumers in this unprecedented time," said CEO Benno Dorer.
The company raised its growth outlook to reflect the sustained demand increases for its cleaning products. It expects organic sales to rise from 6% and 8% for the full fiscal year, translating into a significant jump from the former forecast of only 1%.
"We saw demand surge in some of our disinfecting categories by 500%, and no supply chains in the packaged goods industry is currently set up that way," noted Dorer. "We have turned out 40 million disinfectant products more this last quarter than in the previous year quarter for an output increase of 40%."
In its fiscal Q3, Clorox reported profits of $1.89 per share on $1.78 billion in total revenue, smashing Wall Street's estimates for the three-month period and making the company an exception in a quarter marked by massive business losses and company shutdowns.
Sales were up 15% from the year ago quarter and up 32% for the Wall Street analysts now project total company sales to increase 9% in Q4, according to Factset analysts. Clorox shares rose 3.4% to $192.71. Its stock is up more than 25% this year.
"We're investing in future capacities so that we're better equipped to meet the demand in future surges, hopefully, and we expect to be in a much better shape with substantial improvements this summer," according to Dorer.
Clorox said it's boosting its ad spend by $50 million as demand for its disinfectants surges.
"The Clorox Company will invest $50 million more in advertising sales promotion in the back half of our fiscal year because we believe this is the time to serve as many consumers as possible, not just with disinfectant products but also as people grill more as they stay home," said Dorer.
