Key Highlights

  • Net sales rose 33% to USD 1,905 million from USD 1,429 million, including a 14% Volume contribution from an acquisition.
  • Diluted earnings per share rose 114% to USD 1.39 from USD 0.65, as net earnings reached USD 170 million.
  • Gross Margin fell 130 basis points to 40.4%, while selling and administrative expense fell to 15.2% of sales.
  • Health and Wellness net sales rose 62% to USD 918 million, with segment adjusted EBIT up 69%.

Quarter in Numbers

The Clorox Company (NYSE:CLX) reported net sales of USD 1,905 million for the first quarter of fiscal 2027, the three months ended September 30, 2026, compared with USD 1,429 million a year earlier. Acquisition volume contributed 14 percentage points of total company growth. Gross Profit was USD 770 million, up 29%, and gross margin was 40.4% compared with 41.7%.

Selling and administrative expenses rose 5% to USD 290 million, which fell to 15.2% of net sales from 19.4%. Advertising costs rose 14% to USD 190 million, or 10.0% of sales, and Research and Development costs were USD 29 million. Interest expense more than doubled to USD 52 million from USD 23 million. Earnings before income taxes were USD 207 million versus USD 107 million, and the effective tax rate fell to 16.4% from 23.4%.

Net earnings were USD 173 million versus USD 82 million, and net earnings attributable to the company were USD 170 million versus USD 80 million. Diluted net earnings per share were USD 1.39 versus USD 0.65, an increase of USD 0.74, or 114%. The company attributed the increase primarily to higher net sales and cost savings, partly offset by higher Commodity costs and higher Manufacturing and logistics costs. By our calculation, the lower tax rate added roughly USD 0.12 to diluted earnings per share, so most of the gain came from operations. Diluted shares were about 122.0 million versus 123.0 million. By our calculation, pre-tax earnings were 10.9% of net sales versus 7.5% a year earlier, and advertising grew 14% against sales growth of 33%, so advertising intensity fell to 10.0% of sales from 11.6%.

Segment Detail

The Health and Wellness segment posted net sales of USD 918 million, up 62% from USD 565 million, with volume up 55% and segment adjusted EBIT up 69% to USD 209 million from USD 124 million. The company said the acquisition contributed 33 percentage points of volume growth in Health and Wellness and 14 points for the total company. The increase in segment adjusted EBIT was primarily due to higher net sales.

Leadership Change and Guidance Update

On the earnings call, management said the Board appointed Fabian Garcia as the company's next chief executive and that the updated fiscal 2027 outlook reflects current realities along with mitigation actions. Management described its focus as strengthening Brand superiority, improving the consistency of performance and creating sustainable value over time.

Margin and Leverage Indicators

The combination of a larger sales base, a lower gross margin and higher interest expense after the acquisition changes the shape of the income statement compared with a year ago. Items to track include gross margin recovery against commodity, manufacturing and logistics cost pressure, interest costs, Organic Sales trends excluding the acquisition, advertising intensity and the Leadership transition.