Clorox Cyberattack: Operations Disrupted, Financial Impact Looms

Clorox, known for manufacturing a range of household staples such as Clorox bleach, Pine-Sol and Hidden Valley Ranch, reported that an August cyberattack severely disrupted its operations, hindering the production of its products. Currently, Clorox is manually fulfilling and processing orders, with a return to normal operations expected to commence next week, CNN reported.

In an official regulatory filing on Monday, Clorox disclosed that it had detected unauthorized activity in some of its IT systems on August 14. The company took immediate action to contain the attack, reducing its operations. Although Clorox reported that it believes it has now contained the cyberattack, it has not yet fully restored its manufacturing operations and added that it “cannot estimate” how long it will be until it fully restores normal production.

“The cybersecurity attack damaged portions of the Company’s IT infrastructure, which caused widescale disruption of Clorox’s operations,” Clorox wrote in the filing. “The Company is repairing the infrastructure and is reintegrating the systems that were proactively taken offline.”

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Meanwhile, the cyberattack and resulting delays are anticipated to significantly impact the company’s financial results for the upcoming Q1 2024 quarter, of which its reporting date has yet to be announced.

“The company now believes the impact will be material on Q1 financial results,” Clorox wrote in the regulatory filing.

The anticipated decline was reflected by a 1.7% drop in Clorox shares during premarket trading Monday, The Wall Street Journal reported.

The last time Clorox faced production challenges was in the early months of the pandemic when surging demand for its cleaning wipes and sprays outpaced production capacity. Although the company increased production, demand waned as pandemic restrictions eased and vaccines became widely available.

In 2020, Clorox shares rose by almost 32%, but they declined by nearly 14% in the following year and an additional 20% in 2022, the WSJ noted. Over the past year, Clorox maintained sales growth by raising prices even as consumers reduced purchases of its products. However, for its current fiscal year, which began in July, Clorox expects sales to remain flat or experience a modest increase of up to 2%, according to WSJ.