Rising prices for raw materials cut into profits at Clorox Co., which said Tuesday that its third-quarter net income fell more than 8 percent.
The company managed to post a revenue gain _ a turnaround from two quarters of declines _ but it lowered its estimate for its full-year revenue, and worried investors sent the company's shares down nearly 4 percent.
Like many companies, Clorox is caught in a quandary. It's facing higher prices for commodities and wants to pass along those costs to customers. But customers already are squeezed by higher prices for gas and groceries, and they're likely to trade down to generics if Clorox raises prices too much.
The maker of Hidden Valley salad dressings, the Burt's Bees personal-care line and numerous well-known cleaning products, Clorox said it would raise prices on the "vast majority" of its U.S portfolio.
It said it had already raised prices on Glad trash bags 9.5 percent to compensate for rising resin costs. And CEO Don Knauss, who acknowledged that customers are hurting, said reaction to that price hike is a "wild card."
"When you're pulling up to a gas pump in San Francisco and you're paying $4.30 for a gallon of gas _ I think that's a fundamental shift from where it was three months ago," he said on a call with analysts. Clorox is based in Oakland, Calif., just across San Francisco Bay.
But Knauss said that when Clorox faced rising commodity prices and raised prices in the past it hasn't met too much pushback.
"We've been down this road before," Knauss said, "and we have weathered it well."
Some Clorox products actually benefited during the last big hike in gas prices, in fall 2008, as customers opted to cook dinner at home rather than go out, Knauss said.
Clorox also hopes to persuade customers to keep shopping by offering new products, such as new odor-control cat litter or a pending filtration sports bottle.
"In this environment, if you can sell $600 iPads, I think we can do a better job of selling our brands as well," Knauss said.
In the most recent quarter, which ended March 31, higher sales of Burt's Bees products and bigger shipments of Clorox disinfecting wipes to institutional customers all helped shore up revenue. But Glad trash bags and Brita water filters both lost ground.
Analyst Connie Maneaty of BMO Capital Markets questioned whether the company should consider selling Glad. "Don't you ever look and say, 'Well, it's just a trash bag'?" she asked executives during the conference call.
Clorox's revenue rose 1.3 percent, a big improvement from drops of about 3 percent in each of the previous two quarters. Executives said they expect revenue growth in the current quarter to be slightly higher.
Even so, Clorox said sales for the year would be flat to down 1 percent compared with the previous fiscal year. That was a change from its February forecast for flat to up 1 percent.
Clorox now expects to earn $3.85 to $3.95 per share for the year, down from the $3.85 to $4 range it predicted in February.
The company reported net income of $151 million, or $1.02 per share. Excluding one-time items, earnings amounted to $1.03 per share, short of the $1.04 analysts expected on average, according to FactSet.
Its revenue of $1.3 billion missed analysts' average estimate for $1.32 billion.
Clorox's shares fell 3.6 percent to close at $67.45. They fell another 22 cents after hours.
The stock spiked for a day in February after activist investor Carl Icahn revealed he holds 9.8 percent of Clorox's outstanding shares.