The Clorox Company Q4 FY2025 earnings call

• Q4 and FY2025 performance had weaker top-line growth but strong margin and earnings. Front half of the year was in line with expectations, back half affected by macro uncertainties. Executed Opulence to build retailer inventories for ERP launch. • Delivered strong gross margin and earnings in Q4, but didn't deliver on value superiority for some businesses. Lapped high demand from last Q4 due to cyber attack rebound. • Luc discussed sales performance breakdown, noting organic sales growth of ~8%, with ERP inventory build accounting for 13%-14% and consumption performance at ~-3%. • Linda emphasized confidence in brands with high consumer penetration and value metrics, and plans for fiscal 2026 including innovation in the back half, net revenue management, and addressing execution issues to improve superiority.

No detailed breakdown of product segment financial performance in terms of absolute revenue and contribution % provided in the transcript.

• Excluding ERP impact, organic sales growth range is -1% to +2%, gross margin flat to +50 basis points, adjusted EPS growth 2% to 4%. • Tariff impact expected around $40 million, offset by sourcing changes, reformulations, productivity improvements, and strategic pricing. • FY2026 outlook includes 11% advertising and sales promotion spend, focus on profitable growth, and leveraging innovation and promotions in the back half to reinvigorate category growth.

• Volatility from ERP implementation, including phasing effects on sales and margins. • Macroeconomic uncertainties affecting consumer behavior, leading to sluggish category performance. • Competitive promotional environment, particularly in certain categories like Cat Litter. • Tariff uncertainties impacting costs. • Potential impact of consumer stress on category performance and execution.

Q: Peter Grom asked about sales performance gap and consumption trends.

A: Luc Bellet broke down sales performance, noting organic sales growth of ~8% with ERP inventory build accounting for 13%-14%, and Linda Rendle discussed dynamic quarter factors, brand health, and plans for improvement.

Q: Andrea Teixeira inquired about industry destocking and ERP impact.

A: Linda Rendle addressed industry destocking as normal inventory management, and Luc Bellet explained ERP implementation details, including inventory build impact and phasing effects on FY2026 sales and margins.

Q: Filippo Falorni asked about category growth and promotional environment.

A: Luc Bellet provided organic sales growth range context and Linda Rendle discussed strategic promotion use and focus on profitable category growth.

Q: Anna Jeanne Lizzul asked about back half improvement and promotion dynamics.

A: Linda Rendle discussed back half improvement from innovation and net revenue management, and strategic promotion use for value communication and innovation introduction.

Q: Bonnie Herzog asked about ERP segment impact and Kingsford.

A: Linda Rendle noted no material ERP segment differences and discussed Kingsford execution issues and plans for improvement.

Q: Chris Carey asked about medium-term top-line and margin objectives.

A: Linda Rendle emphasized excitement for transformation and ability to accelerate profitable growth, with focus on category reinvigoration and margin improvement.

Q: Kaumil Gajrawala asked about consumer behavior differences.

A: Linda Rendle discussed consumer uncertainty, value seeking, and health in essential goods categories, focusing on superiority to address stress.

Q: Olivia Tong asked about value superiority efforts and gross margin confidence.

A: Linda Rendle discussed superiority focus through innovation and investment, and Luc Bellet provided gross margin confidence context with margin transformation efforts.

Q: Kevin Grundy asked about long-term margin targets.

A: Luc Bellet and Linda Rendle discussed margin targets, ERP benefits, and investment focus on profitable growth.

Q: Javier Escalante asked about price mix and category performance.

A: Luc Bellet explained price mix impact and Linda Rendle discussed superiority plans for Cat Litter and Glad.

Q: Robert Moskow asked about digital spend.

A: Linda Rendle explained unique nature of ERP reset as a once-in-a-generation investment versus normal course business spend.

Q: Steve Powers asked about normalized earnings and ERP transition risks.

A: Luc Bellet confirmed normalized earnings approach and Linda Rendle addressed ERP transition risks as not structurally impacting retailer inventory postures.

Q: Stephen Robert Powers asked about normalized earnings and ERP transition risks.

A: Luc Bellet confirmed normalized earnings approach and Linda Rendle addressed ERP transition risks as not structurally impacting retailer inventory postures.