Clorox reveals financial hit from cyber attack

Shares in Clorox were down 8.1 percent, hitting their lowest level since May 2018, after the cleaning supplies company’s warned that an August cyber attack would push it into a quarterly loss and slash up to 28 percent off its revenue.

Clorox forecast a loss per share between US$0.35 and US$0.75 for its fiscal first quarter ended September 30, versus a year-ago profit of US$0.68.

It said net sales would fall year-over-year by 23 percent to 28 percent.

After this, Evercore ISI slashed its Clorox price target to US$120 from US$160 and Raymond James downgraded it to ‘market perform’ from ‘outperform’.

Bank of America cut its price target to US$120 from US$145 while Deutsche Bank dropped its target to US$136 from US$155.

BoFA analyst Anna Lizzul, who rates Clorox ‘underperform’, said its warning of a first-quarter gross margin decline is “particularly notable” as she had expected it to be “the largest quarter for gross margin expansion” in its fiscal year 2024.

Along with the attack and a challenging consumer environment, Lizzul said rising shipment costs from higher oil prices may also push Clorox to reduce promotalsol activity in fiscal year 2024 to protect margins.

And Lizzul saw “little potential to raise prices,” since it had made four rounds of price increases in the last 2 years.

On August 14 Clorox said it took some systems offline after unauthorised activity disrupted operations.

Then on September 18 it said first-quarter results could see a “material impact.”

On September 29 it said all its manufacturing facilities resumed operations and that it was ramping up production to restock inventories after the attack.

But, Evercore ISI analyst Javier Escalante who rates Clorox ‘underperform,’ voiced concerns about how long the company took to work out the financial impact.

He also pointed to its warning about “ongoing, but lessening operational impacts in the second quarter.”

Escalante described this as a “disconcerting” disconnect between operations, financial planning and reporting in his research note.

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AndyC

Andy Curtis is an award-winning security consultant, researcher and public speaker. He has been working in the computer security industry since the early 1990s, having been employed by state and federal government, leading healthcare and banking providers across three continents. He has given talks about computer security for some of the world’s largest companies, worked with law enforcement agencies on investigations into hacking groups, and is a regular voice on TV and radio explaining IT security threats.

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