Clorox Divests Aplicare Skin Unit To Medline Industries

The Clorox Company (NYSE:CLX) announced the sale of its Aplicare skin antisepsis business to Medline Industries. This was done in accordance with the former’s 2020 Strategy, which is aimed at boosting growth for the improvement of categories and overall market share. However, the financial terms of the deal that concluded on Aug 21, remained under covers.

Notably, Aplicare business that was part of Clorox’s Professional Products business, contributed nearly $46 million in fiscal 2017, reflecting not more than 1% of the company’s overall sales as well as insignificant earnings.

In fact, the Illinois-based Medline Industries, which is the leading privately-held maker and distributor of medical supplies, is likely to enhance the performance of the Aplicare business with its solid capabilities and explorations. Also, it will cater top-tier health care products and services to its customers.

With the sale of its Aplicare skin unit, Clorox does not free itself from the responsibility of focusing strategically on its Professional Products business and the company will continue to stop the spread of infection as well as kill pathogens.

Throwing light upon Clorox’s 2020 Strategy, we note that the strategy is aimed at achieving certain long-term aspirations, including growing net sales by 3-5%, increasing EBIT margin by 25-50 basis points and generating free cash flow of 10-12% of sales, all on a yearly basis.

Meanwhile, Clorox seems to be well on track with the execution of the strategy, which is meant to be achieved through key accelerators like investment in brands; development of eCommerce; technological advancements; enhancement of growth culture and focus on the 3Ds – desire, decision and delight.

Evidently, the 2020 Strategy coupled with other factors drove the company’s fiscal 2017 performance. Going forward, Clorox is likely to deliver another year of solid earnings and sales growth in fiscal 2018 aided by these factors. Concurrently, management has also stated that it will issue an updated outlook for fiscal 2018 on Nov 1, when it reports fiscal first-quarter results.

In fact, shares of Clorox have outpaced the broader Consumer Staples sector in the last three months. This Zacks Rank #3 (Hold) stock rallied 4.7%, as against the sector’s fall of 0.3%. Currently, the sector is placed at the top 25% of the Zacks classified sectors (4 out of 16).

Finding Consumer Staples Space Interesting? Check These Out

Better-ranked stocks in the broader sector include Unilever (LON:ULVR) N.V. (NYSE:UN) , Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) and Ingredion Incorporated (NYSE:INGR) .

Unilever has gained 28.3% in the last one year and currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Ollie's Bargain, with a long-term earnings growth rate of 19% has pulled off an average positive earnings surprise of 14.6% in the last four quarters. It carries a Zacks Rank #2 (Buy).

Ingredion, a Zacks Rank #2 stock has delivered an average positive earnings surprise of 4.9% in the trailing four quarters.

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