Clorox (CLX, Financial) reported disappointing Q3 2025 results, mirroring challenges faced by peers Procter & Gamble (PG, Financial) and Kimberly-Clark (KMB, Financial). The company missed both EPS and revenue expectations due to inflation impacting consumer spending. Although CLX reaffirmed its FY25 EPS guidance, it lowered its organic sales growth outlook, citing increased price sensitivity and slower volume recovery in key categories.

• Adjusted EPS fell 15% to $1.35 despite a 240-bps gross margin expansion to 44.6%, driven by cost savings and divestitures. This marks ten consecutive quarters of gross margin growth. However, gains were offset by lower sales volume and increased marketing investments. In the Health and Wellness segment, adjusted EBIT rose 10%, partially offset by higher advertising costs.
• Organic sales dropped 2% in Q3 due to lower volume, partially offset by price/mix contributions. Persistent volume pressures are evident, with a 9% decline in Q2 following an August 2023 cyberattack and a 1% drop in Q1. Factors include a shift to private-label products, smaller consumer baskets, and retailer inventory cuts.
• The Health and Wellness segment showed strength with consistent demand for products like Clorox bleach and Pine-Sol. Net sales rose 3% in Q3, driven by a seven-point volume increase, and segment adjusted EBIT grew 10% due to higher sales and reduced costs.
• The Household segment faced challenges, likely from increased competition and consumer trade-down behavior in categories like trash bags and wipes, resulting in a low double-digit sales decline.

Clorox is navigating macroeconomic challenges, changing consumer behaviors, and competitive pressures, leading to a Q3 EPS miss and a lowered FY25 sales outlook. However, the company’s consistent gross margin expansion and strong brand presence offer resilience in an economic downturn.