Shares of WD-40 Co (NASDAQ: WDFC) fell more than 2.0% in extended trading after the company blamed supply chain constraints for a YoY decline in its first-quarter profit.
Q1 financial performance
WD-40 reported $18.6 million in profit for Q1 versus the year-ago figure of $23.6 million. On a per-share basis, its profit came in at $1.34. The California-based company, however, still noted an annualised increase of 8.0% in quarterly sales, thanks to strong demand for maintenance products.
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The manufacturer of household and multi-use products said costs related to advertising and sales promotion were up 2.0% in the first quarter. Operating expenses stood at $44.4 million – an increase from $41.9 million in the same quarter last year.
Gross margin contracted to 50.8% from 56.4% in Q1 of fiscal 2021. In the earnings press release, CEO Garry Ridge said:
We are pleased with our topline results in the quarter, but we’re facing a volatile and challenging environment that is deteriorating our gross margin and causing disruptions to our supply chain.
For the full financial year, WD-40 now forecasts up to $547 million in net sales. Its previous estimate was capped at $542 million. The U.S. firm expects gross margin to print at 52% to 54% this year.
The Nasdaq-listed company left its full-year profit forecast unchanged at $5.24 to $5.38 per share. Advertising and sales promotion expenses, it said, will print at up to 6.0% of net sales. According to CEO Ridge:
We expect the operating environment to remain volatile and are proactively increasing the capacity and resiliency of our supply chain in many of our markets. To navigate inflationary environment, we are also taking necessary actions to restore our gross margins to historic levels.
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