--Clorox reports strong second-quarter results as sales boosted by higher prices
--Clorox raises full-year sales view due to first-half results
--Shares up more than 2% as results beat expectations
(Updates shares, adds more detail on earnings and volume performance throughout.)
By Paul Ziobro
Clorox Co. (>> The Clorox Company) shares rose as fiscal second-quarter sales rose more than expected with help from higher prices, overcoming concerns that tepid demand in North America would crimp sales for household staples.
Shares were up 2.1% to $70.16 in recent trading, after second-quarter sales and earnings beat expectations. The company's net rose sharply, as last year's results were hampered by a heavy writedown related to its Burt Bees acquisition.
Clorox sales were up 4% in the quarter, prompting the company to raise its sales outlook for the year. Chairman and Chief Executive Don Knauss said the categories that Clorox operates in -- laundry, cleaning products, trash bags and others -- continue to recover from the depths of the downturn, as consumers either started buying lower-priced private label goods or found alternatives, like using plastic shopping bags in trash cans, to the household staples.
Clorox top line results came as other household product makers like Procter & Gamble Co. (>> The Procter & Gamble Company), Kimberly-Clark Corp. (>> Kimberly Clark Corp) and Colgate-Palmolive Co. (>> The Procter & Gamble Company) have in recent weeks warned of continued weak demand in developed markets like the U.S. Clorox generates a larger percentage of its sales in North America than other large consumer product companies, who can rely on fast-growing emerging markets to post growth.
Clorox's latest results were boosted by price increases, including a number made in August on some cleaning products, liquid bleach, Hidden Valley salad dressing and Brita water filtration pitchers. But overall volume remained flat for the quarter. While volume fell on some products where price increases went into effect more recently, Clorox offset those declines with higher volumes in Fresh Step cat litter and Brita, where new products helped.
Clorox said it now expects sales to grow between 2% and 4% for the year, up from its previous target of 1% to 3% growth.
Despite the rosier sales view, Clorox merely backed its profit expectations, although it includes some dilution from recent acquisition. It also expects gross margins to fall slightly as opposed to remaining flat.
For the quarter ended Dec. 31, Clorox reported a profit of $105 million, or 79 cents a share, up sharply from $21 million, or 15 cents a share, a year earlier. Stripping out a hefty writedown on the Burt's Bees business, earnings a year earlier would have come in at 68 cents a share.
Sales improved 3.6% to $1.22 billion. The top line grew 5% in the cleaning business, 4% the household division, which includes Glad trash bags and Fresh Step and 6% in the lifestyle division, which includes salad dressing and Burt's Bees personal care products. The international business posted flat sales versus a year ago.
Analysts polled by Thomson Reuters were looking for earnings of 68 cents a share on $1.2 billion in revenue.
Gross margin narrowed to 41.5% from 41.7% on higher commodity costs.
-By Paul Ziobro, Dow Jones Newswires; 212-416-2194; email@example.com
-Mia Lamar contributed to this article.