Clorox Co. (NYSE: CLX) reported a Q1 profit drop this morning on the back of raw material cost increases. It also announced that it will pay just under a billion ($925 million) for Burt's Bees, a leading provider of natural health care products. Burt's Bees has moved from health food stores and organic markets to the mainstream mass market in the last few years, probably marketing itself to be sold. Apparently, it worked.Clorox's net income dropped to $111 million ($0.76 per share) from $112 million from the year-ago period, which could be seen as a slight decline based on commodity price swings in 2007 alone. Sales for the Q1 period did rise to $1.24 billion, a 6.7% increase.
Clorox indeed said in its earnings release that corn and soybean prices were main factors in the profit decline. Those two food commodities are used in its Hidden Valley food products (namely salad dressings). Resin prices rose in the quarter as well to their highest levels ever, affecting plastic products such as Glad trash bag products and bottles used to hold its namesake bleach.
All in all, Clorox's quarter was not bad considering the commodity turmoil it has exposure to, but I have to question the valuation of Burt's Bees. How did the company come up with a valuation of nearly a billion dollars? Clorox, are you listening?
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Reader Comments (Page 1 of 1)
11-11-2007 @ 11:40AM
susan said...
I have used Berts Bees products for along time . Now that it is owned by a chemical company are their products going to stay the same ? Well , I really do not care ! I found "Nature's Magic " lip balm and skin cream. These are made with all natural ingredients : bees wax , soy wax , avoacado oil , jojoba oil , essential oil in skin cream and raspberry oil in the lip balm . They are fantastic !! Check out their web site : www.lostcreekcandleco.com then try them ! You will be very satisfied and glad you did . They are all hand made in a small town called Lost Creek in West Virginia .
12-27-2007 @ 11:07PM
Chris Jarvis said...
Okay; I'm upset. We're just one step away from animal testing.