Clorox sales rise 33% as adjusted EPS reaches US$1.55

The Clorox Company (NYSE:CLX) delivered a US$1.905 billion first quarter, but the more important signal was buried beneath the headline growth: management now expects fiscal 2027 adjusted earnings to land closer to the low end of its existing range as inflation weighs on margins.

Net sales rose 33% for the quarter ended September 30, 2026, while diluted earnings per share jumped 114% to US$1.39. Adjusted EPS, a non-GAAP measure, increased 82% to US$1.55 from US$0.85. Clorox said the quarter performed better than expected, with higher sales, cost savings and a lower tax rate supporting earnings.

GOJO drives Health and Wellness growth

The acquisition of GOJO Industries, completed on April 1, accounted for about 15 percentage points of total sales growth and 39 points of the 62% increase in Health and Wellness revenue. The segment’s adjusted EBIT rose 69% to US$209 million, while Clorox has now launched Clorox Purell ProCare, combining its professional products business with GOJO under a unified sales and service organisation.

That contribution makes the reported figures difficult to read as a clean measure of underlying momentum. Organic sales, which exclude acquisitions and foreign exchange, increased 18% across the group. The comparison also benefited from lapping the prior-year inventory drawdown linked to Clorox’s US enterprise resource planning transition, which the company estimates reduced fiscal 2026 earnings by about US$0.90 per share.

Cost inflation cuts into gross margin

Gross margin fell to 40.4% from 41.7%, despite US$260 million of cost savings during the quarter and favourable pricing. Commodity costs reduced the margin by 360 basis points, while manufacturing and logistics costs took another 210 basis points. Clorox said higher volume and savings partly offset those pressures, but the cost environment has become more challenging.

The company maintained its fiscal 2027 net sales growth target of 13% to 14% and its diluted EPS range of US$5.41 to US$5.71. Its adjusted EPS range also remains US$5.70 to US$6.00. However, the updated assumptions point to gross margin of about 41.5% and selling and administrative expenses of roughly 15.5% of sales, with management expecting adjusted EPS closer to the bottom of the range. The outlook includes about US$46 million of GOJO acquisition costs, or US$35 million after tax.

Cash generation improves as integration continues

Cash flow offered a firmer note. Net cash provided by operations rose 54% to US$143 million, while free cash flow, a non-GAAP measure, increased to US$105 million from US$57 million in the year-ago quarter. Capital expenditure was relatively modest at US$38 million.

The next test is whether Clorox can convert the GOJO-led sales lift and the post-ERP comparison benefit into durable organic growth after those effects fade. At the same time, the company must absorb acquisition costs and defend margins against commodity and logistics inflation. The reported quarter is strong; the full-year margin equation remains less settled.