The Clorox Company Q1 FY2026 earnings call

• Successfully launched new ERP system in the U.S., which strengthened the digital backbone and unlocked new value streams, though transition had challenges but benefits are ramping up.
• Focused on demand creation plan to deliver superior value to consumers and reinvigorate category growth.
• Consumer remains cautious and value-seeking, with competitive environment varying by category, including increased promotions in some categories.
• Innovation plans across major brands, including Glad's scent platform, Brita's modernizing pitchers, and Birts' expanded platforms.
• Progress on ERP implementation with the company now focused on using it to drive value and reinvigorate category growth.
• Inventory positioning generally good, with most areas having rebuilt inventories, though some areas like Professional still working on full rebuild.

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

• Organic sales growth guidance for fiscal year 2026 is a range of negative 5% to 9%, with current expectations at the lower end. Excluding ERP impact, front half organic sales growth is negative low single digits, back half positive low single digits.
• Q2 expected to be in the low single digits, continuing U.S. retail consumption trends seen in Q1 and lapping early shipment headwinds from Q1.
• Gross margin outlook adjusted due to ERP-related incremental expenses and trade/advertising spending, but generally confident in meeting the outlook with back half expected to see robust gross margin expansion.

• ERP implementation caused temporary disruptions affecting order fulfillment and market share.
• Consumer volatility and uncertainty impacting shopping behaviors, leading to changing consumer wallet dynamics.
• Competitive environment with increased promotions in some categories, potentially affecting margins and market share.
• Potential supply chain issues and extraneous events that could impact sales and operations.
• Private label competition in certain categories like Brita and Bleach, affecting branded share.

Q: Peter Grom asked about organic sales cadence, Q2 outlook, and category growth embedding.

A: Luc Bellet responded that excluding ERP impact, front half organic sales growth is negative low single digits, back half positive low single digits, driven by innovation and lapping negative trends, with Q2 expected to be low single digits.

Q: Andrea Teixeira inquired about promotions environment and price pack architecture.

A: Linda Rendle discussed competitive environment being rational with varied promotions by category, and price pack architecture used in innovation plans.

Q: Kaumil Gajrawala asked about market shares and ERP infrastructure.

A: Luc Bellet unpacked Q1 performance excluding ERP noise, and Linda Rendle spoke about market share loss due to ERP and focus on turning it around with innovation and spending.

Q: Filippo Falorni asked about innovation details and trash/Cat Litter categories.

A: Linda Rendle provided details on innovation across major brands and assessment of trash/Cat Litter categories being competitive with strategic approach to preserve long-term value.

Q: Christopher Carey asked about spending plans for the back half and portfolio evolution.

A: Linda Rendle discussed adjusting spending based on consumer behavior, using tools for targeted spending, and long-term portfolio focus including strengthening core and evaluating options.

Q: Anna Lizzul asked about inventory trends and private label.

A: Linda Rendle noted no material destocking impact, strong club business, and watching private label in categories like Brita and Bleach.

Q: Bonnie Herzog asked about guidance puts and takes and inventory unwind.

A: Luc Bellet discussed wide guidance range due to market dynamics, confidence in inventory positioning, and need for strong execution on innovation and category growth for higher end of guidance.

Q: Olivia Tong Cheang asked about category growth stabilization and ERP adjustment.

A: Linda Rendle spoke about category growth stabilization due to essential categories and focus on back half plans, and ERP implementation completed with organization focused on using it to drive value.

Q: Robert Moskow asked about customer fill rates and price/mix.

A: Linda Rendle said customer fill rates are back to normal mostly, and Luc Bellet discussed price/mix headwinds from value-seeking behavior and channel shifting, with lesser headwind expected for the year.

Q: Kevin Grundy asked about run rate EPS and investment levels.

A: Linda Rendle expressed confidence in navigating the environment and delivering expected performance, with no change in confidence in earnings potential despite current challenges.