The Clorox Company (CLX) Q2 2025 earnings summary

Executive summary

• Leadership transition announced: Kevin Jacobsen retiring as CFO, Luc Bellet to assume the role April 1st, ensuring continuity in financial strategy and transformation initiatives.

• Q2 FY2025 net sales declined 15% to $1.69B, reflecting lapping of post-cyberattack recovery and divestitures; organic sales down 9%.

• Diluted EPS rose 105% to $1.54, driven by lapping prior-year charges and cyberattack insurance recoveries; adjusted EPS fell 28% to $1.55.

• Company has navigated significant disruptions in recent years, including pandemic-driven demand, inflation, and a cyber attack, while maintaining strong compounded annual sales growth and rebuilding gross margin.

• Clorox and P&G will end the Glad joint venture in Jan 2026; Clorox to acquire P&G's 20% stake at fair market value.

Financial highlights

• Q2 organic sales declined 9.5% year-over-year, outperforming guidance due to stronger category performance and share gains; Kingsford shipment timing contributed less than one point to the quarter.

• Gross margin expanded 30 bps to 43.8%, supported by cost savings and divestitures, partially offset by higher costs.

• Q2 net earnings: $194M, up from $96M a year ago; adjusted EBIT for Q2 was $258M, down 33% year-over-year.

• Free cash flow is expected to land at the low end of the 11%-13% target range due to ERP-related inventory build, but operationally is closer to 13%.

• Net cash from operations for six months: $401M, up 132%.

Outlook and guidance

• FY2025 net sales expected to be down 1% to up 2%, including 1–2 pts benefit from ERP transition shipments.

• Organic sales expected up 4–7%, excluding negative impacts from Argentina and VMS divestitures.

• Gross margin now expected to rise 125–150 bps for FY2025.

• FY2025 diluted EPS forecast raised to $5.52–$5.92 (up 145–163% YoY); adjusted EPS to $6.95–$7.35 (up 13–19%).

• Long-term algorithm of 3%-5% annual growth reaffirmed, contingent on macro environment improvement and category normalization.