Clorox NYSE: CLX said it is entering fiscal 2027 with improving market-share trends, a completed enterprise resource planning implementation and a plan to offset more than $200 million in expected supply-chain inflation through productivity initiatives and targeted pricing.
Chair and CEO Linda Rendle said the company operated through fiscal 2026 in an environment marked by value-seeking consumers, heightened competition, inflation and macroeconomic uncertainty. Clorox has responded by adjusting product offerings, price-pack architecture, promotions, brand investment and distribution, while continuing its broader operational transformation.
“While the majority of our businesses are performing at or above expectations, we have taken decisive actions to improve in the areas that are not yet delivering what we expect,” Rendle said. She said the company saw sequential improvement in consumption and market share during fiscal 2026, with consumption returning to flat in the fourth quarter and aggregate share down only one-tenth of a percentage point.
Fiscal 2027 outlook includes muted category growth
Rendle said Clorox expects category growth to remain muted in fiscal 2027, broadly consistent with fiscal 2026, as consumers continue seeking value. The company’s outlook assumes continuity in category conditions and does not contemplate significant disruption from inflation or geopolitical developments.
Clorox expects organic sales to be flat to slightly higher for the year, with a slower first quarter primarily due to timing effects in Kingsford grilling products and promotions. Rendle described the first-quarter impact as a “blip,” saying the rest of the year, particularly the back half, should more closely resemble fiscal 2026 trends.
Kingsford faced a difficult grilling season as weather affected key holidays. Rendle said Memorial Day was unusually cool and wet across much of the U.S., while widespread heat advisories during the July 4 weekend discouraged grilling. Retailers also emphasized smaller sizes on promotion to appeal to value-oriented shoppers. Clorox plans to adjust its merchandising approach next season by encouraging earlier seasonal purchases.
Management expects to continue improving market share in fiscal 2027. Rendle highlighted eight consecutive quarters of share growth in home care, as well as continued share gains in professional and international businesses. The company also cited improving results in Glad and Hidden Valley Ranch, while identifying litter and Kingsford as areas where further progress is needed.
Inflation, pricing and margins
CFO Luc Bellet said Clorox expects fiscal 2027 inflation of more than $200 million, more than double the company’s historical range of $75 million to $100 million. The outlook assumes Brent crude oil averages about $90 a barrel and includes cost pressures beyond commodities, including supplier costs, ocean freight, trucking and other logistics expenses.
Bellet said inflation is expected to be more pronounced in the first half of the fiscal year. Productivity will be the company’s primary offset, supplemented by selective pricing and other revenue-management actions. Clorox expects to begin recovering gross margin in the second half, although it does not expect to fully recover margin for the full year. The company expects to exit fiscal 2027 with a stronger gross margin.
Rendle said Clorox is taking a more selective approach to pricing than in prior inflationary periods, following several substantial price increases during 2022 and 2023. The company is implementing a regular price increase in Glad trash because of that category’s resin exposure, while using targeted pricing elsewhere in the portfolio.
“Pricing is only one tool in the toolbox,” Rendle said, pointing to revenue growth management, price-pack architecture, cost savings and innovation as additional levers. She said management does not see a structural loss of pricing power in its categories, but views the current environment as unusual because it follows back-to-back inflation cycles and pressure on consumer budgets.
GOJO acquisition and operating transformation
Management said the integration of GOJO, which brings the Purell brand into Clorox’s portfolio, is proceeding as planned and in some areas ahead of plan. Rendle said the business performed ahead of its fourth-quarter targets, while Bellet said GOJO was accretive rather than dilutive to adjusted earnings per share in the quarter.
Bellet said GOJO is expected to be accretive to adjusted EPS in fiscal 2027 and is expected to grow at a mid-single-digit rate before potential revenue synergies. As those synergies are realized, management expects growth in the business could reach the mid- to high-single digits for several years.
The CFO also noted that GOJO’s business-to-business model has a different profit-and-loss profile than Clorox’s legacy operations, including lower advertising spending as a percentage of sales and higher selling, general and administrative expenses.
Clorox completed its ERP implementation and is now focused on stabilizing and optimizing the system. Bellet said the company expects supply-chain and administrative benefits to build later in fiscal 2027 and into the following year. Potential benefits include improved planning, lower inventory, automation, more responsive demand fulfillment and increased use of global business services.
Litter turnaround and CEO search
Rendle said litter remains the company’s principal work in progress following the cyberattack and operational disruptions of prior years. The company has restored lost distribution, but is continuing to overhaul the Fresh Step brand through product improvements, packaging changes, marketing, e-commerce upgrades and targeted pricing.
Clorox reduced dust in certain Fresh Step products, expanded investment in lightweight litter and changed packaging and marketing. Rendle said more innovation is planned for the back half of fiscal 2027, though she cautioned that rebuilding consumer awareness, repeat purchases and category momentum will take time.
Rendle also provided an update on Clorox’s CEO succession process. She previously informed the board of her intention to step down due to personal health challenges. She said she is cancer-free, feels well and remains focused on running the company. The board has hired an external search firm and the process is progressing according to its expected timeline.
Clorox expects fiscal 2027 free cash flow to remain within its targeted range of 11% to 13% of sales. Bellet said the company remains committed to its dividend, describing the currently elevated payout ratio as transitory while gross margins rebuild.
About Clorox (NYSE:CLX)
The Clorox Company is a leading manufacturer and marketer of consumer and professional products designed to help people care for their homes and live healthy, sustainable lives. Its portfolio spans cleaning and household products, food and beverages, water filtration systems and cat litter, serving both retail and institutional customers. The company's flagship bleach and disinfecting products are well known in the United States and many international markets, where they help prevent the spread of germs in homes, hospitals, schools and businesses.
Clorox's diverse brand lineup includes liquid bleach and surface cleaners, eco-friendly cleaning tools, food preservation and preparation items, charcoal grills and briquettes, specialty foods and beverages, pet care products and personal care lines.
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