Clorox Adjusted Earnings Recover as Leadership Shifts
Adjusted earnings per share rose 13% year-over-year to $1.64 in the third quarter.
The consumer products maker Clorox (CLX) reported a recovery in adjusted profitability for the third quarter of fiscal 2026, despite stagnant top-line growth and a period of significant leadership transition.
The quarter was marked by a restructuring of the company's executive layer and the departure of its top executive. The Board of Directors initiated a search for a new CEO on May 28, 2026, after Chair and CEO Linda Rendle decided to step down for health reasons. To stabilize operations, the company announced a simplified operating structure on June 17, 2026, consolidating all business units under a new Chief Operating Officer, Chris Hyder, and appointing Nina Barton as Chief Growth & Strategy Officer.
Net sales for the third quarter were $1.67 billion, remaining flat year-over-year, while organic sales decreased 1%. This followed a similar trajectory in the second quarter, where net sales also fell 1% year-over-year to $1.67 billion.
Adjusted EPS rose 13% year-over-year to $1.64. The result represents a reversal from the second quarter, when adjusted EPS fell 10% year-over-year to $1.39. Gross margin for the quarter was 43.2%, a decrease of 140 basis points from 44.6% in the prior-year quarter, though the figure remained flat sequentially compared to the second quarter.
Performance varied across business lines. The Household segment saw net sales increase 3%, driven by volume. Conversely, the Lifestyle segment experienced a 9% decrease in net sales, which the company attributed to 6 points of lower volume.
Clorox lowered its full-year 2026 outlook in April 2026. Net sales are now expected to decline about 6%, while organic sales are projected to decrease about 9%. The company also revised its gross margin outlook downward to a decrease of 250 to 300 basis points, compared to a previous expectation of a 50 to 100 basis point decline.
Earnings guidance was similarly reduced. The company now expects diluted EPS to fall within a range of $4.78 to $4.98, a 24% to 27% year-over-year decrease. Adjusted EPS is projected to be between $5.45 and $5.65, representing a 27% to 29% decrease from the prior year.
Strategic shifts continued as the company completed the acquisition of GOJO Industries, the maker of Purell, on April 1, 2026. Additionally, the company finished a five-year strategic investment in productivity enhancements and digital capabilities during the third quarter.