Clorox shares jump on earnings, acquisition
Clorox Co. on Wednesday reported a quarterly profit that fell less than analysts’ estimates and agreed to buy Burt’s Bees, the maker of natural lip balm and hand cream, for $925 million, its biggest acquisition in nine years.
The bleach maker’s shares rose the most in two months.
Closely held Burt’s Bees, based in Durham, N.C., uses beeswax, flowers and other natural ingredients in its soap, moisturizers and shampoo.
The deal would help Clorox profit from rising consumer demand for environmentally friendly products.
“The Clorox name doesn’t tend to make one think of nature-friendly products,” said Ali Dibadj, a New York-based analyst with Sanford C. Bernstein & Co. “This acquisition can help.”
Shares of the Oakland-based consumer products company, which also makes Brita water purification products, Kingsford charcoal and Fresh Step cat litter, rose $1.57, or 2.6%, to $62.57.
“We see lots of growth potential in Burt’s Bees,” said Beth Springer, Clorox’s executive vice president of strategy and growth.
Clorox will expand distribution of Burt’s Bees products in mass merchandisers such as Target Corp., the second-largest U.S. discount chain.
About 40% of Burt’s Bees sales come from lip-care products, and 30% are from baby and outdoor products. The rest is from personal cleaning, its fastest-growing line.
Clorox said net income for its fiscal first quarter ended Sept. 30 fell to $111 million, or 76 cents a share, from $112 million, or 73 cents, a year earlier.
The company blamed rising costs for soybeans and corn used in making its Hidden Valley salad dressings and for resins used in Glad trash bags.
Revenue rose 6.7% to $1.24 billion.
Excluding one-time expenses, profit was 88 cents a share.
Wall Street analysts had expected 71 cents on average, according to a Bloomberg survey.
The company raised its full-year profit forecast to $3.33 to $3.50 a share from $3.27 to $3.46 to reflect share buybacks.