Clorox, the prominent U.S. cleaning product manufacturer, disclosed on Wednesday that it is likely to report a first-quarter financial loss as a result of a cyberattack in August, which triggered product shortages and operational disruptions. The company anticipates enduring persistent operational setbacks due to the breach, with potential ramifications extending into fiscal year 2024 and beyond.
Recent sources have revealed that industry giants MGM Resorts International and Caesars Entertainment Ltd fell prey to a cyber group identified as Scattered Spider. This group is notorious for employing social engineering tactics to encrypt and ransom data. Bloomberg has also reported that the same group might be behind the Clorox breach, citing inside sources. However, a spokesperson from Clorox maintained that the company promptly notified law enforcement about the attack and would refrain from further comment. The FBI has acknowledged its ongoing investigations into the incidents involving MGM and Caesars, yet it declined to comment on the Clorox breach.
At the time of the August incursion, Clorox divulged that its IT infrastructure suffered a significant impact, necessitating manual processing of orders and the temporary shutdown of specific systems. Clorox anticipates a first-quarter loss, with projected earnings per share ranging from 35 to 75 cents for the period ending September 30. Additionally, a decline in net sales by 23-28 percent is expected compared to the corresponding period last year. In the same period last year, Clorox reported a profit of 68 cents per share. Gross margins, initially slated for an increase in the first quarter, are now expected to see a downturn. Following this announcement, Clorox shares experienced a 2 percent decline in after-hours trading.
While Clorox has benefited from positive trends in pricing, cost savings, and supply chain optimization, the adverse effects of the cyberattack have eclipsed these gains. The company remains vigilant, closely monitoring the long-term repercussions of the intrusion after alerting law enforcement authorities. The potential ramifications on Clorox’s fiscal performance in 2024 and beyond are under ongoing scrutiny.
This cyberattack underscores the growing threat faced by major corporations from increasingly sophisticated hacking groups. Clorox’s response to this incident highlights the critical importance of cyber resilience and robust security measures in today’s interconnected business landscape.
Source: Reuters
