Clorox said a cyberattack would have a material impact on quarterly results.
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Clorox reports its quarterly results in November, but the cleaning products maker is already bracing investors for what it says will be a “material impact” from a cyberattack. It’s the latest big company to deal with a major security breach.
Shares of
Clorox
(ticker: CLX) were trading down more than 1% on Monday after the company disclosed that the attack, which it confirmed in mid-August, damaged some of its IT infrastructure, which then had to be taken offline to contain the problem. That, in turn, led to operational disruptions.
Clorox said Monday that its normal automated order processing system isn’t fully online, as it has taken time to repair. The company plans to start transitioning back to normal operations next week, which will take time to ramp up to previous levels.
“Due to the order processing delays and elevated level of product outages, the Company now believes the impact will be material on first-quarter financial results,” the company said. “It is premature for the Company to determine longer-term impact, including fiscal year outlook, given the ongoing recovery. The Company will provide an update as to financial impact after it has increased visibility.”
Clorox isn’t the only company that has been hit with a cybersecurity attack in recent years. And many consumers may have become immune to warnings of data breaches given their ubiquity. Shares of
Equifax
(EFX) are up roughly 90% since it disclosed its huge breach disclosure in September 2017 that impacted 147 million people and was seen as egregious given the sensitive financial data it held. The $425 million it set aside to help consumers in settlement is less than 2% of its current market value.
Nonetheless, cyberattacks on consumer companies have been making headlines this year. Both
MGM Resorts International
(MGM) and
Caesars Entertainment
(CZR) were hit with breaches this month that analysts at Jefferies and other firms estimate could end up costing millions in revenue. MGM warned that the attack would have a material impact and Caesars is expected to follow.
As companies push to do more of their business in the cloud, concerns rise. According to cybersecurity firm
Check Point Software Technologies,
48 ransomware groups attacked more than 2,200 victims in the first half of this year. The 8% jump in attacks during the second quarter reflected the highest volume of breaches in two years. “The manufacturing and retail sectors have seen the most victims, suggesting a shift in ransomware attack strategy,” the firm noted.
Harnessing new technology like artificial intelligence and machine learning already costs a pretty penny. As D.A. Davidson analyst Linda Bolton Wesier noted, Clorox was in the midst of a multiyear drive to upgrade its digital capabilities, with annual expenses as high as 70 cents a share, when the attack happened.
Strong cyberdefenses on top of this are costly too. But as Clorox and others show, dealing with the chaos of a breach can be even more expensive.
Write to Teresa Rivas at [email protected]
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