Skip to content
    CLX
    Earnings call· Jun 2026(Q4 FY26)

    CLOROX CO /DE/ Q4 FY26 earnings call CLX

    Aug 3, 2026 Source

    Executive summary

    The Clorox Company Q4 FY26 — Stronger Foundation and Sequential Improvement

    The Clorox Company concluded FY26 with sequential improvements in consumption and market share, building a stronger foundation despite a dynamic macroeconomic environment. The GOJO acquisition is performing ahead of expectations, contributing positively to adjusted EPS. While facing persistent inflationary pressures and muted category growth, the company is focused on strategic investments in product superiority, innovation, and brand building, particularly in categories like Home Care, Glad, and Hidden Valley Ranch, to drive market share gains and long-term profitable growth. The ERP implementation is complete, with benefits expected to ramp up in FY27 and beyond.

    Highlights

    5

    • GOJO acquisition performing ahead of expectations, now expected to be accretive to adjusted EPS for FY27 (initially neutral).

    • Home Care business delivered 8 consecutive quarters of share growth.

    • Market share turnarounds achieved in Glad and Hidden Valley Ranch due to reinvestment in superiority and marketing.

    • Innovation as a percent of sales doubled in FY26, with strong plans for FY27.

    • Free cash flow generation expected to be in line with targeted 11%-13% of sales for FY27.

    Concerns

    5

    • Inflationary pressures expected to be above $200 million in FY27, more than double the historical range of $75M-$100M.

    • Gross margin expected to be lower in the first half of FY27 due to elevated cost headwinds.

    • Weaker category growth expected in FY27, consistent with FY26, due to macroeconomic uncertainty and value-seeking behavior.

    • Litter business continues to face challenges, requiring additional investments in superiority and innovation in the back half of FY27.

    • Q1 FY27 organic sales growth impacted by timing issues related to Kingsford grilling season and promotional shifts.

    Guidance & targets

    12
    CategoryTargetConfidence
    Organic sales growth
    flat to up slightly
    high materiality
    High
    GOJO growth rate
    mid-single digit
    medium materiality
    High
    GOJO growth rate (with synergies)
    mid- to high single digits
    medium materiality
    Medium
    GOJO Adjusted EPS impact
    accretive
    medium materiality
    High
    Inflationary pressures
    above $200 million
    high materiality
    High
    Brent crude oil price assumption
    $90 per barrel
    medium materiality
    Medium
    Inflation impact timing
    more pronounced in the first half
    high materiality
    High
    Gross margin trajectory
    start recovering gross margin in the back half
    high materiality
    High
    Gross margin exit rate
    exceed the year with a much stronger gross margin
    high materiality
    High
    Free cash flow generation
    in line with our targeted range of 11% to 13%
    high materiality
    High
    Interest expense
    about $210 million
    medium materiality
    High
    Advertising spend as % of sales
    over 11%
    medium materiality
    High

    Operational metrics

    18
    Americans under heat advisory
    185 million
    July 4 weekend

    During July 4 weekend, 185 million Americans were under heat advisory and almost 150 daily city temperature highs were broken, impacting grilling behavior.

    Dividend payout ratio (company)
    85%
    current

    The company's dividend payout ratio is around 85% of net earnings.

    Dividend payout ratio (Staples Group)
    50% to 60%
    current

    The Staples Group's dividend payout ratio is around 50% to 60%.

    SG&A rate (adjusted for GOJO transaction costs)
    15.5%
    FY27 outlook

    The 16% of sales SG&A includes about 40 basis points of negative impact from GOJO transaction-related costs, resulting in an adjusted rate of about 15.5%.

    SG&A rate (GOJO pro forma impact)
    1 point higher
    post acquisition

    GOJO has a higher level of SG&A, adding about 1 point to the overall SG&A rate post-acquisition.

    Advertising as % of sales (GOJO pro forma impact)
    1 point lower
    post acquisition

    GOJO's advertising as a percentage of sales is about 1 point lower than the legacy Clorox business.

    ERP implementation inefficiencies
    under half of range
    FY26

    Most ERP-related inefficiencies were experienced in Q2 and Q3 FY26, estimated to be under half of a percentage point range.

    GOJO pro forma gross margin dilution
    0.5 point
    post acquisition

    The pro forma gross margin of the acquired GOJO business has about 0.5 point of dilution.

    GOJO growth rate
    mid-single digit
    FY27

    The GOJO business is expected to continue growing at a mid-single-digit rate.

    GOJO growth rate (with synergies)
    mid- to high single digits
    few years

    With the realization of revenue synergies, the GOJO business is expected to grow at a mid- to high single-digit rate for a few years.

    Free cash flow as % of sales
    11% to 13%
    FY27

    Expected free cash flow generation for FY27 is in line with the targeted range of 11% to 13% of sales.

    Interest expense
    $210 million
    FY27

    Projected interest expense for fiscal year 2027 is about $210 million.

    Glad trash share growth
    growing share
    Q4

    The Glad trash business saw share growth in Q4 FY26.

    Hidden Valley Ranch share turnaround
    turnaround of share
    Q4

    Hidden Valley Ranch experienced a turnaround in market share in Q4 FY26.

    SG&A productivity vs. inflation
    more than offset
    next year

    The level of productivity in SG&A for next year is expected to more than offset the level of inflation.

    Dividend increase streak
    decade
    current

    The company has increased its dividend annually for a decade.

    Grilling category decline
    declined
    Q4 FY26

    The Grilling category, across all fuel types, declined in Q4 FY26 due to weather-related issues.

    Distribution points (post-cyber)
    higherthan it was post cyber
    today

    Distribution is actually higher today than it was post-cyberattack, with the company gaining share of distribution this year.

    Industry KPIs

    9
    MetricValueDetails
    Sg a rate16%% of sales
    Organic sales growthflat to up slightly
    Regional emerging market growthstrong share growth
    Advertising marketing investmentover 11%% of sales
    Commodity input cost sensitivityabove $200 millionUSD
    Category level organic sales growth8 consecutive quarters of share growth
    Innovation new product contributiondoubled
    Category growth benchmark market sharedown 1/10share point
    Core underlying EPS and operating marginaccretive

    Deals & partnerships

    1
    GOJOAcquisition of GOJO, bringing the Purell brand into the portfolio and expanding the health and hygiene platform.

    The acquisition is performing ahead of expectations, with strong strategic rationale and identified opportunities for synergies and enhanced growth. Integration is proceeding as planned, and the business is expected to contribute positively to company performance.

    Risks & headwinds

    5
    Macroeconomic Uncertainty & Value-Seeking BehaviorFY27

    weaker category growth expected for FY27, consistent with FY26

    Mitigation: Sharpening product experiences, strengthening price pack architecture, improving promotion effectiveness, increasing brand-building investments, ensuring presence where consumers shop.

    Inflationary PressuresFY27, more pronounced in the first half

    above $200 million in FY27, more than double historical range of $75M-$100M; Brent crude oil assumption $90/barrel

    Mitigation: Productivity (primary lever), strategic pricing, working capital focus. Expect gross margin recovery in H2 FY27.

    Geopolitical BackdropOngoing

    creates volatility across energy, commodity and supply chain markets (implied in $200M+ inflation)

    Mitigation: Addressed through general inflation mitigation strategies.

    Kingsford Grilling Season ImpactQ4 FY26

    category declined in Q4 FY26; 185 million Americans under heat advisory and almost 150 daily city temperature highs broken during July 4 weekend

    Mitigation: Correcting retailer merchandising choices for next season (starting March FY27) to load consumers earlier.

    Litter Business ChallengesOngoing, with progress expected in FY27

    far from where we want to be on that business; continues to have a hangover

    Mitigation: Reinvention efforts, additional investments in superiority, launching innovations in H2 FY27 to improve product, packaging, marketing, and e-commerce performance.

    What to watch in Q1 FY27

    4

    Organic Sales Growth

    H2 FY27
    CurrentQ1 FY27 expected to be a 'blip' due to timing issues
    TargetImprovement in consumption trends and organic sales growth, particularly in H2 FY27

    Why it matters

    Verifies the company's ability to overcome Q1 timing impact📎s and deliver on its full-year organic sales outlook, indicating underlying business health.

    Q1 is a blip given some timing issues, but we would expect that pattern to continue, particularly again in the back half of '27.

    Q&A highlights

    7

    Clarification on the organic sales outlook (flat to up slightly) for FY27, specifically regarding embedded category growth assumptions, market share expectations, and the expected trajectory of consumption trends throughout the year, given a slower Q1 start.

    Management expects muted category growth in FY27, consistent with FY26, due to macroeconomic factors and value-seeking behavior. They anticipate continued market share progress, building on strong Q4 FY26 exit rates. Q1 is primarily a timing issue (Kingsford, merchandising), with sequential consumption and share improvements expected to continue, particularly in the back half of FY27.

    “Q1 is a blip given some timing issues, but we would expect that pattern to continue, particularly again in the back half of '27.”

    asked by Peter Grom · answered by Linda Rendle

    2 min read6 chapters

    Detailed Narrative

    01

    FY26 Performance & Strategic Focus

    Despite a dynamic environment marked by heightened value-seeking, increased competitive activity, and inflationary pressures, Clorox achieved sequential improvements in FY26. The company focused on advancing superiority in key categories by sharpening product experiences, strengthening price pack architecture, improving promotion effectiveness, and increasing brand-building investments. The long-term strategy emphasizes accelerating consumer-led innovation, shaping a portfolio structurally positioned for faster growth, advancing operational excellence, and generating fuel for reinvestment.

    02

    Category Growth & Market Share Dynamics

    Weaker category growth is expected to continue in FY27, consistent with FY26, driven by macroeconomic uncertainty🌐 and consumer value-seeking behaviors. Clorox aims to make continued progress on market share, building on strong exit rates in Q4 FY26. Notable share gains were seen in Home Care (8 consecutive quarters), Pro, International, Glad, and Hidden Valley Ranch. The company views itself as a driver of category growth and is actively addressing value-seeking and consumer trends through targeted investments and innovation.

    03

    GOJO Acquisition Performance & Integration

    The Clorox Purell acquisition is performing strongly, with the business exceeding its Q4 targets and expected to grow at a mid-single-digit rate, potentially reaching mid-to-high single digits with revenue synergies. GOJO is now anticipated to be accretive to adjusted EPS in FY27, a stronger outcome than the initial neutral expectation. The integration is progressing as planned, with identified opportunities to enhance growth and synergies, further strengthening the company's health and hygiene platform.

    04

    Inflationary Pressures & Gross Margin Outlook

    Fiscal year 2027 inflation is projected to exceed $200 million, more than double the historical range of $75M-$100M, driven by commodities, supplier costs, ocean freight, and trucking. The outlook assumes Brent crude oil at $90 per barrel. Inflationary impacts are expected to be more pronounced in the first half of FY27, with gross margin recovery anticipated in the second half, leading to a stronger exit rate for the year. Productivity and strategic pricing are key levers to offset these pressures.

    05

    ERP Implementation & Future Benefits

    The ERP implementation is complete, and the company is currently in a stabilization phase. Benefits are expected to ramp up later in FY27 and into FY28, primarily through supply chain optimization (including better planning, lower inventory levels, and increased automation) and administrative efficiencies. The upgraded digital infrastructure also enables broader utilization of global business services, which is expected to accelerate productivity in SG&A in the coming years.

    06

    Targeted Pricing Strategy & Portfolio Discipline

    Clorox is employing a targeted and strategic pricing approach, rather than broad price increases, given the current consumer environment and previous inflation cycles. Innovation is a critical component of pricing power, with new product rollouts contributing to value. The company maintains a disciplined approach to portfolio management, regularly reviewing opportunities for acquisitions or divestitures to strengthen its core, always prioritizing shareholder value and execution capabilities.

    AI-generated summary of the company’s earnings call. Not investment advice.