The Clorox Company (CLX) Q2 2026 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call summary reveals mixed signals: strong financial performance but weak guidance, disciplined promotional activities, and ERP-related expenses tapering off by Q4. The Q&A section indicates management's focus on innovation and strategic investments. However, concerns about negative volume and pricing, unclear long-term profitability impacts, and limited growth trajectory changes balance the positive elements, resulting in a neutral sentiment.
Key Financial Performance
Revenue Delivered results largely in line with expectations despite a volatile macroeconomic environment and temporary impacts of ERP implementation. No specific figures or year-over-year changes mentioned.
Digital Transformation Advancing digital transformation and enhancing execution to strengthen foundation. No specific financial figures or year-over-year changes provided.
Acquisition Planned acquisition of GOJO Industries to expand leadership in health and hygiene. No financial figures or year-over-year changes mentioned.
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Operating Highlights
ERP implementation: Advancing digital transformation and enhancing execution through a modernized ERP foundation.
Innovation: Accelerating innovation to deliver superior value to consumers.
Acquisition of GOJO Industries: Planned acquisition to expand leadership in health and hygiene, unlocking long-term growth opportunities.
Digital transformation: Strengthening foundation by advancing digital transformation and enhancing execution.
Health and hygiene market expansion: Decisive step to expand leadership in health and hygiene through acquisition of GOJO Industries.
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Risk or Challenges
Volatile Macroeconomic Environment: The company acknowledges that the volatile macroeconomic environment has added complexity to their operations, posing challenges to achieving their goals.
ERP Implementation Challenges: Temporary impacts from the implementation of a new ERP system have created operational difficulties, affecting the company's performance in the first half of the year.
External Pressures: External pressures, though unspecified, have contributed to the complexity of the business environment, potentially impacting strategic execution.
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Guidance & Outlook
Forward-looking statements: The company is navigating a highly dynamic environment and anticipates challenges in the first half of the fiscal year due to a volatile macroeconomic environment and temporary impacts of ERP implementation. Despite these challenges, results are expected to align with expectations.
Digital transformation and ERP: The company is advancing its digital transformation and driving value from its newly modernized ERP foundation, which is expected to enhance execution and deliver superior value to consumers.
Acquisition of GOJO Industries: The planned acquisition of GOJO Industries is expected to expand leadership in health and hygiene and unlock long-term growth opportunities.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:Can you talk about the exit of the quarter and how you are seeing the competitive and promotional environment?
A:Linda Rendle stated that there was sequential improvement in the quarter, consistent with expectations for stronger performance in the back half of the year. The category numbers were in line with Q1, with Q2 down 0.1 point. Share performance was down but showed sequential improvement. The competitive environment returned to pre-COVID levels, with some intense pockets in litter, Glad, and Home Care. Category growth is expected to be 0% to 1% in the back half, with stronger share performance driven by innovation and demand plans. Consumer behavior remained steady, with a focus on value, larger sizes, and value-oriented channels.
Q:Can you comment on the trajectory for the third quarter of fiscal and the impact of ERP transition?
A:Linda Rendle noted sequential improvement in Q2, with a stronger exit rate continuing into January. The category growth expectation remains between 0% and 1%, with no indication of a trajectory change. ERP transition impacts were largely resolved by January.
Q:Can you frame the magnitude of shipment favorability in the quarter and its reversal in Q3?
A:Luc Bellet explained that there was about a point of favorability due to higher-than-expected shipments ahead of consumption, mainly related to the final phase of ERP implementations. This will reverse in Q3. The last phase of ERP implementation went smoothly, and there is no implication for the full year.
Q:Can you discuss your confidence in share gains continuing and the timing of innovation benefits?
A:Linda Rendle expressed confidence in share gains continuing, supported by innovation across major brands. Innovations have begun shipping, but most shelf resets will occur in late Q3 or early Q4. Examples include a new cleaning platform addressing allergens, Glad ForceFlex with LeakGuard, a litter business relaunch, and Hidden Valley's avocado ranch. Investments are doubled for these launches, and early results are encouraging.
Q:How should we think about pricing and promotional environment in the second half of the year?
A:Luc Bellet stated that price mix is expected to be a slight headwind (about 1%) for the full year, with volume growing slightly ahead of organic sales growth. Linda Rendle added that promotional levels are elevated but in line with historical rates. Specific categories like Cat Litter and trash bags are seeing higher promotions, and the company is being disciplined in its promotional activities.
Q:What is the status of digital investments and ERP-related spending?
A:Luc Bellet clarified that fundamental investments in digital transformation, including ERP, will wrap up in Q3. Incremental ERP-related expenses will go away by Q4. The company has steadily increased technology investments, offset by productivity savings and automation.
Q:Can you explain the negative volume and pricing in the household segment?
A:Luc Bellet attributed the negative volume and pricing to consumption and market share losses, as well as a shift to larger sizes and channel shifting. Linda Rendle noted that higher promotional levels in Cat Litter and trash bags were intentional to build back share, with Scoop Away promotions at Costco having a disproportionate impact.
Q:What is your strategy for balancing growth and profitability in the household segment?
A:Linda Rendle emphasized innovation as the primary strategy, with plans for a full relaunch of the litter business and new innovations in trash bags. The company is balancing market share, consumption data, and profitability while addressing competitive pressures through disciplined price promotions and long-term innovation plans.
Q:Where are you now post-quarter versus the category growth rate, and what is needed to meet your longer-term growth algorithm?
A:Linda Rendle stated that categories were flat in Q1 and Q2, with expectations of 0% to 1% growth in the back half. For the longer-term IGNITE strategy of 3% to 5% net sales growth, category growth needs to return to 2% to 2.5%, with an additional point from Pro and International businesses. The GOJO acquisition is expected to support this growth.
Q:Would you consider price investments in your categories given the consumer environment?
A:Linda Rendle stated that the company has made selective price investments in areas where consumers are under pressure, such as trash bags and Home Care. The company is committed to maintaining appropriate price gaps and will make strategic price reductions if necessary, supported by holistic margin management capabilities.
Q:What initiatives are in place to offset headwinds from larger pack sizes and promotional environments?
A:Linda Rendle highlighted the company's RGM capabilities to design the right pack and price for consumers across channels. The company is addressing both larger and smaller size trends, with a focus on value-oriented channels. Inventory levels at retail are in line with expectations, with no material risk of destocking.
Q:What are the expected benefits of the ERP implementation?
A:Luc Bellet explained that the ERP implementation will enable process redesign, automation, and efficiency gains in supply chain and admin functions. Benefits will include cost savings, gross margin expansion, and improved Global Business Services. These will contribute to the company's goal of 25 to 50 basis points EBIT margin expansion.
Q:How are advertising and promotional spending being managed in the back half?
A:Luc Bellet stated that advertising investments are planned at the business unit level, balancing advertising and trade promotions to support innovation and reinforce superiority. While there may be a slight shift, the investment levels are considered adequate and strong.
Q:Is there a price reset in the litter relaunch?
A:Linda Rendle confirmed that the litter relaunch includes price pack architecture adjustments to address consumer trends and clarify tiering within the litter business.
Q:What is the risk of distraction from the Purell acquisition given other category challenges?
A:Linda Rendle stated that the Purell acquisition aligns with the company's strengths in Health and Wellness, with a strong management team and advanced operations. The integration is being managed in a disciplined way, with dedicated teams ensuring focus on core categories.
Q:What is the impact of the ERP shift on fiscal '27 and flexibility for investments?
A:Luc Bellet confirmed that the ERP shift will result in normalized shipments and sales in fiscal '27, adding about 3.5 points to sales and $0.90 in EPS. Linda Rendle emphasized the company's commitment to making strategic investments to grow brands and categories, supported by strong margin management capabilities.
Q:Review of Unclear Management Responses
A:Management avoided directly addressing the potential for a significant trajectory change in category growth beyond the 0% to 1% range, despite questions about improving consumption trends. Additionally, while they discussed promotional activities and price investments, there was limited clarity on the specific impact of these actions on long-term profitability and market share recovery.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CEO Rendle
CFO remark
CLX release
Clorox Ms
Conference Instructions
Factors section
Form discussion
Instructions reminder
Relations today
Rendle CFO
Risk Factors
addition remark
conference Vice
discussion statement
information measure
measure CLX
measure Risk
outcome addition
release factor
remark measure
remark statement
result outcome
section Form
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CLX Transcript
The Clorox Company (CLX) Q2 2026 Earnings Call Transcript
Unknown2-3
The earnings call summary reveals mixed signals: strong financial performance but weak guidance, disciplined promotional activities, and ERP-related expenses tapering off by Q4. The Q&A section indicates management's focus on innovation and strategic investments. However, concerns about negative volume and pricing, unclear long-term profitability impacts, and limited growth trajectory changes balance the positive elements, resulting in a neutral sentiment.
The Clorox Company (CLX) Presents at Morgan Stanley Global Consumer & Retail Conference 2025 Transcript
Neutral12-2
The Clorox Company (CLX) Q1 2026 Earnings Call Transcript
Unknown11-3
The earnings call summary indicates a mixed outlook. Financial performance is expected to improve in the back half of the year, driven by innovations and demand plans, but current trends show muted growth and competitive pressures. Margins are under pressure from costs and ERP disruptions, yet improvements are anticipated. Market strategy focuses on innovation and portfolio management. The Q&A reveals cautious optimism with some concerns about competition and execution. Without a market cap, the overall sentiment is neutral, reflecting balanced positives and negatives.
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CLX Report
Frequently Asked Questions
Where does this earnings call transcript come from?
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Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
