Q3 2025 The Clorox Co Earnings Call
Good day, ladies and gentlemen, and welcome to the Clorox Company, 3rd quarter, fiscal year, 2025, earnings release conference calls.
At this time, all participants are in a listen only mode. At the conclusion of our prepared remarks, we will conduct a question and answer session. If you would like to ask a question, you may press star one on your touchtone pad at any time.
Speaker Change: If anyone should require assistance during the conference, please press star zero on your touch-tone patch at any time. As a reminder, this call is being recorded. I would now like to introduce your host for today's conference call, Miss Lisa Burhan.
Speaker Change: Vice President of Investor Relations for the Clorox Company. Ms. Burhan, you may begin your conference.
Lisah Burhan: Thank you, Paul. Good afternoon, and thank you for joining us. On the call with me today are Linda Rendle, our Chair and CEO , and Luc Bellet, or CFO . I hope everyone has had a chance to read our earnings release and prepare remarks, both of which are on our website.
Speaker Change: In just a moment, Linda will share a few opening comments and then we'll take your questions.
Lisah Burhan: During this call, we may make fort-looking statements, including about our fiscal year 2025 outlook.
Speaker Change: These statements are based on management's current expectation that may differ from actual results or outcome.
In addition, we may refer to certain non-GAAP financial measures.
Speaker Change: Please refer to the forward-looking statement section which identifies various factors that could affect such forward-looking statements which has been filed with the SEC.
Speaker Change: During the second half of the third quarter, However, U S consumer sentiment weakened substantially and macroeconomic and geopolitical uncertainties drove changes in shopping behaviors, resulting in temporary category impact and lower than expected sales.
Speaker Change: Despite these headwinds our fundamentals remained strong we held overall market shares and delivered our 10th consecutive quarter of gross margin expansion, which enables us to keep reinvesting in our brands renovation pipeline and in the transformation of our business.
Speaker Change: As we look ahead, we anticipate consumers and retailers will remain under pressure, which is reflected in our updated outlook that said, we are confident in our portfolio of trusted brands and their central role. They play in consumers' daily lives are proven resilience and execution equip us to navigate the uncertainties ahead.
Speaker Change: For this year, hence we continue back to deliver organic sales growth and another year of strong earnings growth, while continuing to progress our long term strategy.
Speaker Change: With that Luke and I will take your questions.
Speaker Change: Okay.
Speaker Change: Thank you Ms Rendell, ladies and gentlemen, if you have a question. Please press star one on your Touchtone telephone telephone.
Speaker Change: Yeah.
Speaker Change: And our first question comes from Us.
Speaker Change: Our most senior <unk> of Morgan Stanley.
Speaker Change: Yeah.
Speaker Change: So just go ahead and step back.
Speaker Change: I'd love to hear your perspective on what's driving the category weakness we're seeing.
Speaker Change: Traditionally your categories have been pretty defensive and resilient. Obviously, you mentioned the weakness in the back half of the quarter with the macro uncertainty, but the reality is the broader market concerns ramped up more in April than the weakness we've seen in the household products categories beginning in February so.
Speaker Change: Just a bit of additional perspective will be helpful. On the category weakness we're seeing.
Speaker Change: How long do you think that sustains and maybe difference versus what we've seen in past cycles.
Dara: Sure Dara I'll get US started thanks for the question.
Dara: Maybe just I'll start with a step back I think to your point, we've been around for a long time 112 years and we've seen a lot of different economic scenarios. We've seen inflation, we've seen recession certainly in the recent years with Covid et cetera, and absolutely. The case that our categories are fairly resilient during times like this and we play.
Dara: In household essentials, so we tend to see our category is at the high point in the low single digit positive and at the lowest points, we see low single digits in the decline.
Dara: And what we saw in this period is on average low single digit decline and there is some nuance on that I think would be helpful to break apart and maybe I'll just start with Q3 I'll talk about what we are beginning to see in Q4 in April and May be just how we're thinking about it moving forward, but if you look at Q3 through mid February generally in line with what we had.
Dara: Expected and to be clear for fiscal year 2005, we expected in a more strained consumer so categories going from about Q2, and a half down to about plus one and thats. What we saw through the first half of the year in the first half of the quarter.
Dara: And then with a lot of the uncertainty is coming with different macroeconomic policy is what you are seeing with tariffs we begin to see that change in mid February and the beginning of that that change what we really saw was changing baskets within the retail locations people shop for our brands. So we saw people prioritizing food a bit more we saw.
Dara: That market basket shifted within the store then as tariffs came out we saw consumers actually changing their wallet much more broadly well beyond the market basket that includes our goods. So we thought things how things like people buying more automobile people buying iphones, but wallet was changing pretty dramatically what we saw with conserving behavior.
Dara: Many of our categories.
Dara: That resulted in.
Dara: Excuse me.
Dara: Okay.
Dara: That resulted in our categories being down.
Dara: It's flat.
Dara: Going to take a sip of water sorry hold on for a second.
Dara: Oh.
Dara: Alright, that's better.
Dara: Our category as being flat to again downloads and pretty volatile in that period between mid February and the end of the quarter.
Dara: And I think what we're seeing is consumers react the new cycle every other day is changing and so consumers are thinking about how they meet all of their needs across a broad range of market basket.
Dara: And ensure that they have their essentials at home.
Dara: What kind of buoys, our confidence is what we're not seeing as consumers change their at home behavior in our categories. So we're not seeing people for example trade down to private label in any meaningful way on our categories. We're not seeing people decide to not participate in our categories. What we're seeing is people buying smaller sizes are larger.
Sizes in our portfolio, we're seeing they're using every last bit of what they have at home.
Dara: And what they are trying to do is prioritize the purchases they need to prioritize given the environment. That's going on externally. So that gives us confidence that our categories will continue to be resilient, because we're not paying that behavior change in any substantial way and again, we play in those essentials. So what does that mean for what we're seeing maybe in Q4 and just how we think about the timeframe on that.
Dara: For Q4, our April was a very similar look to what we saw in the back half of Q3.
Dara: We saw range from category being flat, one way to down two and a half and pretty volatile up and down but I would say you know what we expect for the quarter the categories to be down low single digits based on on what we're seeing and that's what we've contemplated in the outlook.
Dara: A big question for all of US is how long will this last and at this point, it's very difficult to say because it's difficult to say exactly what will happen as it relates to tariffs the geopolitical environment, which continues to be pretty volatile and uncertain, but the thing we are certain of our categories generally are pretty resilient I still think they are pretty rich.
Dara: <unk>, given what's going on right now consumer behavior in our categories remains largely unchanged people are pinching pennies right now to try to make it work.
Dara: And what we're just looking at really closely is just that behavior start to change and do we start to see behaviors that getting nothing yet, but we're watching closely private label, we're watching trade down really closely we're watching channel shift.
Dara: And then at what point your consumers feel more confident.
Dara: And their ability to navigate whatever is coming and we see our category growth return to that low single digits that we would expect that timing is uncertain, but we just feel confident in our ability to navigate it until we get to that point.
Dara: Alright. Thanks.
Dara: Yeah.
Dara: Our next question comes from Filippo for morning.
Dara: Judy.
Speaker Change: Hey, good afternoon, everyone I wanted to just expand on <unk> question, a little bit longer term.
Speaker Change: Obviously, you have a 3% to 5% long term algorithm, one organic sandwich assume a healthier level of category growth. So assuming the categories remain relatively soft or how should we think about like your underlying opportunity from an organic standpoint, as we think about exiting fiscal 'twenty.
Speaker Change: Five and into 'twenty.
Speaker Change: Thank you.
Speaker Change: Thanks Felipe.
Speaker Change: We're not setting guidance for fiscal year, 'twenty, six or beyond now, but I'll just make some kind of overall comments.
Speaker Change: First would be you're absolutely right that are 3% to 5% growth algorithm is predicated on having category growth back to what we would normally expect it to be around 225% and we don't have visibility to that category growth at this moment, but again would expect based on the consumer fundamentals over time that will come back.
Speaker Change: Meantime, we would expect our category growth to be suppressed given the fact that our categories are down so our growth will be reflecting on that.
Speaker Change: When we talk about fiscal year 'twenty six we'll talk about what we expect again not setting that right now, but certainly for Q4, you're seeing muted growth and you'll see that in the remainder of our outlook for Q4, given what we're seeing in the categories.
Speaker Change: Great.
Speaker Change: Helpful and maybe one for Luke.
The new guidance, you mentioned the impact of tariffs.
Speaker Change: Hum.
Speaker Change: Margin on that basis, but can you give us a sense of like what the gross impact from tariffs that you're expecting.
Speaker Change: To mitigate that impact thank you.
Speaker Change: Yes, Thanks Filippo.
Speaker Change: Maybe just as a piece of context, we talked about it in the past, but our exposure is relatively limited.
Speaker Change: When you look at your.
Speaker Change: Our portfolio, we tend to manufacture closely to where we sell our products.
Speaker Change: You said that given the <unk>.
Speaker Change: The tariff rate the impact.
Speaker Change: Unmitigated impact.
Speaker Change: That we expect is a 12 month run rate of about $100 million.
Speaker Change: All you'd see less than our fair share in Q4, we expect about $10 million to $20 million in the outlook.
Speaker Change: That's because we have inventory and it's going to take time to for that.
Speaker Change: He has to work through that inventory and hit our P&L.
Speaker Change: Now I would say ABC. So this is this is fairly material, but all in all we think it's manageable and we expect that we'd be able to offset that over time.
Speaker Change: Now obviously, we already started working on litigations and working at a broad set.
Speaker Change: Of levers, we're looking at changing sourcing.
Speaker Change: Make it all the change to similar chance looking at potential re formulations of.
Speaker Change: Of course, considering product improvement as well as some levels of strategic pricing.
Speaker Change: No we don't expect to.
Speaker Change: You see some broad base.
Speaker Change: Price increase, but we're certainly looking at targeted and price increase that would be more modest in magnitude that movie seemed in the past few years.
Speaker Change: Great. Thank you so much.
Peter Grom: Our next question comes from Peter Grom.
Speaker Change: Yes.
Speaker Change: Thanks, operator, and welcome move.
Speaker Change: I wanted to ask a little bit on the gross margin guidance just in the context of the fourth quarter.
Speaker Change: The year to date performance adviser really kind of tough.
Speaker Change: And look I know the guidance always included Dallas on him, but I'm curious what the drivers have changed and I guess, what I'm trying to get out is there anything that we need to kind of take away from the implied for Q pressures that we kind of need to take into account as we think about fiscal 'twenty.
Speaker Change: No we just touched on tariffs.
Speaker Change: I believe those questions.
Speaker Change: You aren't giving guidance on 2006, right now I totally get that.
Speaker Change: Or anything else, that's really changed as we think about kind of the puts and takes on gross margin in the fourth quarter.
Speaker Change: Okay.
Speaker Change: Thanks Peter.
Speaker Change: I would say.
Speaker Change: If you look at our gross margin for the fourth quarter, It's let's say, it's about 44%. So it's fairly close to the average for the full year, which.
Speaker Change: But he is going to be about 44, 5%.
Speaker Change: The other thing I mentioned is a lot of our assumptions.
Speaker Change: Remained consistent with our prior outlook, there's a few changes and let me walk you through that first we have some timing that was favorable in Q3 and unfavorable in Q4 and this is us to do with some manufacturing expenses that were shifted from one quarter to the other.
Speaker Change: That's about half a point that's favorable in Q3 and oxo point, that's unfavorable in Q4.
Speaker Change: The second thing I would say is generally.
Speaker Change: Both Q3, and Q4 cost savings are coming a little stronger as well as some other expenses coming slightly more favorable so that adds up.
Speaker Change: And then of course, there is the impact of.
Speaker Change: The impact of tariffs in Q4, just mentioned, it's going to be about 10 million to $20 million.
Speaker Change: So a few puts and takes but all in all.
Speaker Change: We expect gross margin in Q felt to be about 44 basis points.
Speaker Change: Very much aligned with what we're seeing for the year and that gives you a good sense of what kind of work.
Speaker Change: Gross margin coming into next year.
Speaker Change: That's super helpful. And then I guess just.
Speaker Change: I wanted to ask I think in the remarks.
Speaker Change: Mark you touched on some retail destocking that happened in the quarter is there any way you can put some guardrails around how much of an impact that had.
Speaker Change: And that has that kind of continued at all or is that contemplated at all in kind of a fourth quarter sales guidance.
Speaker Change: Sure Peter.
Q3.
Speaker Change: That happened very late in the quarter and what we're seeing from retailers.
Speaker Change: Generally is not broad inventory retail Destocking. This was limited to our household business.
Speaker Change: And came late in the quarter based on some things that they were doing to adjust to the ever changing environment. We.
Speaker Change: We do expect some impact in Q4, I'll have Luke walk through the impacts for both quarters.
Speaker Change: As we look at this and as we understand retailers plans I think it's just helpful perspective, we don't view this as a strategic issue, we're not seeing any consumer out of stocks at at shelf.
Speaker Change: Putting any of our category at risk this really as retailers doing everything possible to manage their complex supply chains, given the changing environment and I'll pass it over to Luke to talk about just how impacted Q3, and how we're thinking about Q4.
Luke: Yes, certainly so as you look in Q3 this was fairly modest.
Luke: It was big when you look at the household segment, but when you look at total company with less than a point.
Luke: And we expect we expect most of the impact actually comes in Q4.
Luke: So it's out to just put a specific numbers because there's a lot of volatility in Q4, but that's embedded in our outlook range.
Speaker Change: Great. Thanks, so much I'll pass it on.
Luke: Yeah.
Luke: Our next question comes from Mizuho.
Luke: <unk> Bank of America.
Speaker Change: Hi, good afternoon. Thank you so much for the question.
Speaker Change: I wanted to ask on the promotional activity that you mentioned in the prepared remarks as being largely normalize at this point, but it does appear you still have some promo activity in certain categories like glad maybe.
Speaker Change: Promo activity might not be as productive at this point. So was wondering if you could talk a bit about promotional activity by category and then secondly on the introduction of innovation just wondering how your squaring the introduction of more premium products with a weaker consumer sentiment and a greater need for product.
Speaker Change: First one here thank you.
Speaker Change: Sure. So on promotion, we are seeing at the aggregate level promotion normalized and about what our expectation was and so that's going back to levels that we saw pre COVID-19 and that continues to be true, but we absolutely are seeing by category nuances and differences some categories promotions slightly lower than that some categories.
Speaker Change: <unk> is higher you called out glad and that is one of the categories, where we're seeing higher promotion and were seeing from competition. Some fairly deep discounting going on on different sizes at some large retailers and we've seen that behavior since our second quarter, and we're seeing that persist through the third quarter.
Speaker Change: And into the fourth quarter so definitely.
Speaker Change: Competition looking for share of wallet.
Speaker Change: And in that category. We've responded but we're also trying to be very rational we don't grow these categories by doing deep discounting and promotion, we use that strategically to remind consumers.
Speaker Change: Bye.
Speaker Change: To grow market baskets.
Speaker Change: B and promotional activities with retailers at times that are important to them.
Speaker Change: We're trying to be disciplined on this but we're watching it really closely in and ensuring that we have the right value at shelf and that leads to your next question on innovation and what we're seeing is consumers are absolutely willing to pay a premium for innovation that delivers superior value and a better experience. We're seeing many of our innovations center is a great example of that is.
Speaker Change: The premium that is doing very well as well as the recent launches.
Speaker Change: That one because its a premium we're seeing our premium cat litter execution is doing very well in market.
Our premium burts bees hidden valley launches, all doing well and at the same time, we're seeing consumers that are also looking for value in different ways, whether that be pack sizes, and we offer pack sizes that address all of those needs whether they'd be low out of pocket opening price points or very large sizes to get the very best value per user per.
Speaker Change: <unk>.
Speaker Change: And we're seeing consumers go there and we feel good about the mix that we have across the retailers and then of course, you know, we're broadly assorted and all the retailers where where consumers shop.
Speaker Change: Feel good about the our ability to continue to innovate innovate and premium segments and it will also be very important for us to continue and ensure that we have the right promotions in place again at the levels that we expect that our normalized we don't see that environment changing in any meaningful way at the moment outside of the small category examples that I called out.
Speaker Change: And then continuing to ensure that we have.
Speaker Change: The right price value as we do that limited strategic pricing that we've talked about in response to tariffs.
Speaker Change: But overall I would say our value continues to be strong with consumers. If you look at the consumer value measure that we have we're still significantly up and we were at the beginning of this strategy period on pre Covid.
Speaker Change: Actually household penetration is up for US late last 52 weeks Clorox is a brand thats up significantly over two points of household penetration in the last 52 weeks and as you know our <unk> portfolio is very premium in the category. So feeling good about our ability to deliver on that core value equation that we have which is more premium products and premium experiences and consumers can.
Speaker Change: <unk> to be willing to pay for them.
Speaker Change: Okay. That's super helpful. Thanks, so much.
Anna: Thanks Anna.
Anna: Our next question comes from Bonnie Herzog.
Anna: Goldman Sachs.
Alright. Thank you Hi, I was hoping you could provide an update on your upcoming ERP transition.
Anna: How does the current demand backdrop impact your shipments and then the inventory build that I guess I'm.
Anna: I'm trying to understand why you're now expecting a greater lift on organic sales from the from the transition in Q4 than you previously thought.
Anna: What's your visibility do you have on that also curious if you expect to unwind to be evenly split in Q1, and Q2 next year, possibly a greater impact in Q1.
Speaker Change: Sure Bonnie I'll start and then I'll pass it over to Luke to talk about the impacts and how we're thinking about that.
Anna: Playing out over the couple of quarters.
Speaker Change: First from an ERP perspective, we remain on track to our execution to make this transition coming up.
Anna: Here at the beginning of next fiscal year.
Anna: We're working really closely with retailers right now on the plans and our team feels prepared and ready to go and as you know we had a successful transition on our ERP in Canada last year as well as the successful transition in our financial planning tools.
Anna: Feel good about coming up on this transition and anxious to get the capabilities that this will unlock for the company.
Anna: As it relates to the demand you know this was something we gave a outlook to last quarter, but knew that this would be refined as we worked with retailers on their specific plans and thats, what youre seeing in the new outlook is that refinement as retailers have come back and given us a better idea of what they will take from an inventory perspective before I.
Luke: Pass it to Luke I'll, just say one more thing which is.
Luke: To the degree that the environment is volatile al is just how we're thinking about this and how retailers are putting us in perspective, they have given us very clear idea of what theyre going to take but I would say we have a wide range on our outlook and these results could vary a bit given the fact that they are adjusting their inventories real time. This.
Luke: What they want to have in stock to ensure that our categories remain in stock. They have a lot of history of doing this.
Luke: But as you can imagine this is an interesting time to be doing this given what's going on but we feel pretty good about these estimates given retailers have worked at a very detailed level with us on exactly what they need by category, but that I'll hand, it over to Luke.
Luke: Thanks Linda.
Speaker Change: Yes, so I think at that point.
Luke: The plan is going as expected.
Luke: We have the final confirmation for most of our retailers know ICD and dimension there would be some.
Luke: There is a little bit of thought.
Luke: Variability around the numbers, but net in aggregates, we expect retailers to build about one and a half weeks of inventory and again, they're building their inventory ahead of us going live introduces them to make sure that we can mitigate.
Luke: Pension risk of out of stocks.
Luke: Now as you look at the range just for perspective.
Luke: One or two days of inventories could equate to one or two points of growth in the quarter and so that's why you see a fairly wide range in our outlook.
Luke: Now as far as the reversal all of it you know not only the impact on the P&L, but there will be also some impact on the balance sheets will reverse in the fall of next year with the vast majority reversing in the first quarter.
Speaker Change: Okay. Thanks, and then I guess, just Linda what you were mentioning earlier I guess that's like.
Speaker Change: I'm, a little surprised given the slowing demand backdrop that now wants to buy more and then maybe just a quick follow on question related to that what should we expect in terms of short and long term margin impact.
Speaker Change: Impact as a result of your ERP transition I can't recall, if you ever quantified that price, but I know, it's a positive thing.
Speaker Change: Sure. Yes. This is.
Speaker Change: For retailers. This is a very important transition for them because they want to make sure that we meet our mutual goal, which is ensuring no impact to their shopper and to our consumer and so it's very important to them. During a time like this to ensure that they have that backup inventory just like we have backup inventory planned in our own system to accommodate that.
Speaker Change: And they wouldn't want to put this at risk regardless of what's going on in the environment.
Speaker Change: I think the volatility that we're referring to is the fact that they're managing this and just base inventory at the same time and that's why there's such a wide range around it but they feel very strongly as do we that we hold excess inventory across the supply chain to ensure if there are any little bumps that we can cover them. So they remain committed to that as do we.
Speaker Change: Maybe just framing the margin piece, obviously, we have built a tool box with our holistic margin management program to return margins to what they were pre COVID-19 and we've done that from a gross margin perspective.
Speaker Change: From a long term perspective, this continues to buoy, our confidence in being able to deliver our EBIT.
Speaker Change: <unk> goal, which is 25 to 50 basis points annually and the set of tools. The ERP all of the technologies, we're putting in place to not only help us grow but also help us be more efficient are part of our confidence in continuing our margin expansion program, even in an environment thats pretty uncertain and volatile.
Speaker Change: Alright, thank you so much.
Bonnie: Thanks Bonnie.
Speaker Change: As a reminder, if you would like to ask a question. Please press star one on your <unk>.
Bonnie: Telephone.
Robert Moskow: And our next question comes from Robert Moskow.
Bonnie: Thank you Colin.
Robert Moskow: Hey, I actually had two questions.
Robert Moskow: One was I was wondering if you could give us a little more like broad perspective on when you do give us give us a tariff impact.
Robert Moskow: What do you think will be included in there won't be finished goods packaging.
Robert Moskow: Will it be exports to Canada that are that you will include in that estimate and then a quick follow up.
Robert Moskow: Yeah.
Robert Moskow: Yes, Rob, but most of it is you know packaging and raw supply not very little finished goods and then we did mentioned there is some imports coming from Canada, and Mexico and the U S. It's relatively small and I think we what we shared is about.
Robert Moskow: About single digits of our total cost and we do have some export to Canada as well, but again, it's a fairly small amount.
Robert Moskow: Optical total product supplied.
Robert Moskow: Supplied in the country.
Robert Moskow: So that's the extent that's the extent of our exposure.
Robert Moskow: Okay, and then the follow up.
Speaker Change: I think you are the first CPG company I've heard who's talked about the pull forward of spending on electronics automobiles.
Robert Moskow: I totally get it but.
Speaker Change: Do you have like any evidence that that impacts grocery basket.
Speaker Change: Like purchases at Staples.
Speaker Change: Do you think theres like money that comes out of blood and goes into the other.
Speaker Change: Yeah.
Speaker Change: You know what I think.
Speaker Change: It.
Speaker Change: Safe to assume that consumers have one wallets at the end of the day and Theyre, making distributor choices on that wallet.
Speaker Change: And what we're watching carefully is that wallet and what's happening and certainly the evidence would point to the fact that they are spending more in certain categories.
Speaker Change: Given what we're seeing broadly across industries, while beyond ours.
Speaker Change: And then correspondingly at the same time, we're seeing what we're seeing and in our categories.
Speaker Change: The piece that cements it for US is the fact that we're not seeing at home consumer behaviors change yet so that really points to the fact that theyre changing the shape of their wallet and spending versus changing their behaviors and de prioritizing different categories.
Speaker Change: At the end of the day, they have a limited amount of money and they have to distribute that based on their choices and I think certainly they are reacting to an environment, where they are not exactly sure where things are going to cost coming up in the future and they are thinking about those big purchases and and they're turning in others and anecdotally we've talked to consumers and they have said just that that's exactly what they are trying to do is manage their overall wallet.
Speaker Change: Can we provide a one to one causal relationship no. It would be too early to do that and difficult, but certainly all of the evidence points to the fact that consumers are adjusting their spending and that's the reason why our categories are being impacted.
Speaker Change: Got it that makes sense thanks, guys.
Robert Moskow: Thanks Robert.
Robert Moskow: Our next question comes from.
Robert Moskow: General Wawa.
Robert Moskow: France.
Robert Moskow: Okay.
Robert Moskow: Hi, everybody.
Robert Moskow: I guess still digging into this.
Robert Moskow: Consumer.
Robert Moskow: Slow down, which obviously you guys are not alone.
Speaker Change: But when I look between divisions and I see that.
Speaker Change: How much more it seemed to impact household and some of the other divisions, which at.
Speaker Change: At least to me I would've guessed is the division that.
Speaker Change: It would be a little bit more resilient, particularly.
Speaker Change: Somebody sort of at home categories in there so a couple of <unk>.
Speaker Change: On that which is.
Speaker Change: Do you feel like maybe there is excess inventory within the consumers pantry, obviously, you talked about retail.
Speaker Change: And then second what is it about those.
Speaker Change: <unk> brands or categories that.
Speaker Change: That led to them being impacted a lot more.
Speaker Change: Okay.
Speaker Change: Yeah. This one I think requires us to get into retail sales versus ourselves and thats, where youre going to see a lot of the difference and what went on with household.
Speaker Change: So if you look at retail sales those categories generally looked like the categories did for the rest of our portfolio and frankly looked well beyond what would you'd see in scanner. So we certainly saw that in international we saw that professional.
Speaker Change: All of our categories and patch it given what is going on for household as it relates to why sales was down Theres a few things going on.
Speaker Change: One we talked about the inventory that Luke called out that the adjustments happened all in household for us and that is impacting our sales, but not necessarily consumer takeaway our retail sales because certainly we were in stock in those moments, we saw some timing and weather issues. Easter is later we had.
Speaker Change: Weather issues impacting kingsford, even though we grow share there and then later we had a promotion last year that we didn't lap this year and so there was a timing issue, but what I would say is generally those categories don't look any different than our other categories do it just a number of factors impacted our sales in households, this quarter and then Luke talked about the fact that.
Speaker Change: Some impact in Q4 as that inventory correction continues to happen, but we would largely expect those things to normalize once you kind of take a step back and just don't look at the correlated quarterly impact but over time.
Speaker Change: The one place that we would say is being hit harder right now is glad given the promotional environment that was less about consumers adjusting their behavior, given what's going on in the atmosphere and more around competitive activity, but that's no different than what we've seen in glad over time.
Speaker Change: And so we feel decent that theres not a category that is having a wildly different impact on another on the positive what I would call out is a good example, cleaning and.
Speaker Change: And that's a place where we grew share significantly the category was down but not as much as some of the other categories were and you can see the performance on our sales were very strong.
Speaker Change: As well as all the other line items from a margin and EBIT perspective. So again the impacts buried all of our categories were impacted to some degree but the difference in what youre seeing in our sales number in retail sales would say that some of this again is timing and just impacts of lapping versus anything structurally different in our businesses.
Speaker Change: Okay got it thank you.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: And our next question comes from.
Speaker Change: Javier Escalante.
Speaker Change: Of Evercore ISI.
Speaker Change: Okay.
Speaker Change: I would like to go back.
Speaker Change: New York.
Speaker Change: Guidance for fiscal 'twenty five.
Speaker Change: Organic sales.
Speaker Change: If you exclude the ERP transition.
Speaker Change: It seems like <unk>.
Planes at Q4 organic sales you are guiding to.
Speaker Change: Four.
Alone.
Speaker Change: Thats correct and why is it.
Speaker Change: As you know such a low growth given the easy comp.
Speaker Change: From a year ago.
Speaker Change: Yes, I'll take that thanks for the question. So maybe let me just.
Speaker Change: There's a few moving pieces as we think about Q4, so let me unpack this a little bit.
Speaker Change: First our organic growth is 45% and so with one quarter remaining.
Speaker Change: Q4 <unk>.
Speaker Change: Organic growth of 428%.
Speaker Change: Now we've talked about the impact of the ERP transitions. This is 2% to 3% for the full year, so that equates to about 7% to 11% for Q4, because Q4 is generally a leila.
Speaker Change: Higher sales than the remaining.
Speaker Change: The quarters.
Speaker Change: If you back that out you kind of get to Q4 organic sales growth, excluding the impact of about negative 3%. So not far from what the number you ship now of course, there is a range around that and we talked about it.
Speaker Change: And then essentially if I unpack that minus III.
Speaker Change: Two parts to it there is the.
Speaker Change: We are assuming that the recent concerns consumption slowdown persist in Q4.
Speaker Change: Talked about this and there's also some headwinds.
Speaker Change: Retailer inventory reductions that we start seeing in the household.
Speaker Change: In Q3 and will continue into Q4.
Speaker Change: Thank you Luke.
Speaker Change: Follow up to Linda.
Speaker Change: And it's kind of like digging a little bit into the household.
Speaker Change: Sector.
Speaker Change: Yeah. Appreciate the Kingsport piece, you also I believe advanced a little bit of shipments in the second quarter.
Speaker Change: The other two big businesses they are glad.
That leader having come on as you said you have very strong value players.
Speaker Change: So if you could talk about.
Speaker Change: The the tranche also on jewelry novation in these two categories.
Speaker Change: Retailer reception.
Speaker Change: On consumer reception and to what extent, what give you confidence that you do not have it.
Speaker Change: Thank you nishu structural pricing issue beyond promotions given that you have.
Speaker Change: New players with very strong business proposition in these categories. Thank you.
Speaker Change: Sure.
Speaker Change: And turn Javier because squad and let our too.
Speaker Change: Different.
Speaker Change: That's the circumstances, although as you know good good tough competition in both of those categories.
Speaker Change: So glad is as we've noted we're seeing increased competitive activity from the other branded player in the category, reducing pricing starting back in Q2, which looked like temporary price decreases although those have not rolled off yet and are focusing on those on some of the larger value sizes and in some cases up.
Speaker Change: Bring them below private label pricing.
Speaker Change: <unk>, which we view is not sustainable over the long term or watching it really closely but if you look at that category, even with that it held up pretty well.
That was one that was down a little bit less than some of our other categories were.
Speaker Change: And so we see actually fairly resilient, given what's going on with the consumer they're not generating less crashes.
Solution to have to get rid of trash.
Speaker Change: So we're looking at that as one that will over time more normalized we've seen that in glad for many many years, our innovation is doing very well in that category.
Speaker Change: Cagny you might recall Javier we spoke about our Bahama Bliss launch in our force flex business, which is doing very well, we're expanding bahama bliss right now and different retailers.
Speaker Change: And we continue to see people willing to pay that premium for a better trash bag experience, whether that be delightful color a great sense and.
Speaker Change: And we're making sure that of course, we have the right value equation across that more premium line as well as our more base trash bag line as well, but we view this as just higher competitive activity in glad.
Speaker Change: Given what's going on in the category and with consumers, but nothing that makes us worried that our proposition around our premium trash bag won't continue to be successful in the future and we're going to continue to spend advertising and sales promotion innovation dollars in continuing to ensure that we have the right mix across retailer et cetera. The one thing.
Speaker Change: We are very concentrated on is this is a place where we're seeing channel shift happened quite a bit.
Speaker Change: And people are moving to cloud the and online et cetera, we have.
Speaker Change: Distribution wherever consumers shop, but that's something that we're making sure that we even sharpen that that value proposition by retailer to ensure that we are capturing that channel shift now.
Speaker Change: Now and into the future and then for litter, there's a number of brands and the cat litter category and we play into we play in in the premium segment and then we have a smaller business in scoop away that plays in more of a mid tier proposition and we feel good about our ability to compete here. This is a place where innovation across our competitive set and our innovation does very well, there's a number of.
Speaker Change: Unmet needs in the cat litter category, whether that be odor control a lack of tracking around the house when the cat litter get stuck on cats pause.
Speaker Change: Clumping et cetera, and we've launched recently a letter that has the strongest odor control claim on the market with 30 days, that's doing very well.
Speaker Change: And we're seeing consumers react to those enhanced benefits, but this is a category that is competitive and we talked about the fact that we were making it a bit more competitive for a while there because we were using promotions to ensure that we got consumers back.
Speaker Change: After we lost them due to the cyber attack and we've made really great progress there we have more to go.
Speaker Change: But continue to feel good that our investment in innovation, our investment in advertising and sales promotion is heading in the right direction, but we have more progress to make heavier over the coming quarters.
Speaker Change: Thank you very much.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Andrew Shapiro of GDP.
Speaker Change: Gordon.
Speaker Change: Yeah.
Speaker Change: Thank you operator, and good afternoon, everyone talks.
Speaker Change: Talks about the bifurcated consumer and understandably you have a portfolio that accommodates that.
Speaker Change: A little wind in the high end, but I was hoping to see if you can share. Some examples you did share and keep on the high end, but perhaps give us some comfort on.
Speaker Change: Being able to pivot where the consumer is and meet the needs of our pricing on a value perspective and also in terms of the channels you regain.
Speaker Change: This high growth, including including clubs as pivotal way and some of the drugstore exposure that you may have that may be cooperating with this consolidation. If you can explain some of that thank you.
Speaker Change: Sure Andrew why don't I take the second part of your question first and then I'll get into the portfolio question. So in channels were broadly distributed everywhere and happen to be very strong in the channels, where consumers are moving so as we see them move into mass and club. These tend to be channels, where we have placed early baths.
Speaker Change: And have very strong share positions and so feel good as consumers are moving into those those channels in aggregate that we are there for them and that we have the right value proposition.
Speaker Change: And drug stores, just as you noted we're not a very strong player in drug that's a place given we don't have a big portfolio in more of the health and beauty areas that we are not overly distributed we're fairly distribute it in and again, we tend to be.
Speaker Change: Stronger in the channels, where consumers are choosing to shop today, so feel good about our ability to deal with that changing environment. It can have an impact on as you saw in this quarter mix. It can have those types of impacts but feel good about our ability to ensure consumers have what they need from clorox.
Speaker Change: On the bifurcated side you know this is a really interesting story and maybe I'll tell you in cleaning. How this is playing out because it's an area that that works really well for us over the last few years, but particularly if you look at this quarter. It is a great example.
Speaker Change: So we have the most premium cleaning products, we have things like a disinfecting wipe which is one of the highest prices per use but theyre very convenient and consumers love them.
Speaker Change: And we also have diluted forms that are very very good value on a price per ounce like clorox bleach like painful dilutive cleaners and so what we've seen is consumers who are time start to continue to move into forms like disinfecting wipes theyre very convenient as youre dealing with things like cold and flu. So those segments continue to do.
Speaker Change: Well as well as consumers who might be more stretched trading into things like dilutive bowls and bleach. So for example, the bleach category was down our share was up significantly and then you saw the deliverables category, both strong and our share position with its strong so.
Speaker Change: So that consumers are navigating their cleaning tasks at home, we have a portfolio that serves all of their needs, whether they're looking for something quick and convenient and they're willing to pay the premium like a disinfecting wipes or a toilet wands as well as when Theyre looking to get the very very best cost per use and they are turning to our pine Sol brand or bleach.
Speaker Change: And that's a great example, where we grow share significantly this quarter that business delivered strong financial performance this quarter and we saw really well covered if you look at some of our other categories. That's less of a dynamic because it's Austin private label and we feel very good about our ability to compete Kingsford is a great example, where we grew share this quarter, even though that category.
Speaker Change: Had some puts and takes given weather and timing, but we grew share in the grilling category. So feel very good about that but generally our portfolio. We are well insulated in places where consumers may trade between different occasions in value and price point and then.
Speaker Change: In certain categories, where we have a limited competitive sets convince consumers continue to look for that premium in and we're well suited as well.
Speaker Change: The other thing I would note is in categories like glad you know we have more treatment premium trash bags, and we have more core base trash bags. So consumers don't want all the bells and whistles. They can certainly choose to have a trash bag with less of that at a lower cost per use.
Speaker Change: But that's something we'll continue to watch as we move forward, we'll use our innovation price pack architecture all of those tools to ensure that we have the right lineup, but feel very good about what we have today.
Speaker Change: So is it fair that's super helpful is it fair to say that other than glad the glad trash bags you gained share in most categories.
Speaker Change: In aggregate Andrea we held share for the quarter and it should be fair that was less than our expectations, but I actually feel very good about it given what went on.
Speaker Change: The quarter from a category perspective.
Speaker Change: But we had puts and takes on that so we declined to ensure and litter for example, which we knew was going to happen because we were lapping an events grew.
Speaker Change: Grew and grilling grew in food grew in cleaning. So it was mixed but in aggregate we held share for the quarter.
Speaker Change: That's super helpful. Thank you.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Our next question comes from Kevin Grundy.
Speaker Change: Carrabba's.
Speaker Change: Yeah.
Speaker Change: Great. Thanks.
Speaker Change: Good afternoon, everyone.
Speaker Change: Okay.
Speaker Change: Yes.
Speaker Change: Sort of given boom a conversation together here and then ask you about capital deployment a lot of discussion among in categories pardon me your portfolio growth.
Speaker Change: Growth rates, well below long term targets. It looks like this may sustain and kind of be an obstacle and do you think about guiding for next year.
Speaker Change: Sort of potentially presents you and the board with the decision to leverage the balance sheet potentially.
Speaker Change: Moving to growth your categories, not just near term, but even longer term I would say structurally.
Speaker Change: Flip side to that there'll be companies.
Speaker Change: As you said some maybe some some shortfalls if you will from an M&A perspective. So that's all kind of a big windup Linda how are you how is the board kind of thinking about M&A.
Speaker Change: Firemen.
Speaker Change: It changes potentially elevate.
Speaker Change: <unk> for the opportunity.
Speaker Change: Of M&A, So I'd love to get your thoughts there. Thank you.
Speaker Change: Sure Kevin I think the headline will be as it has been for a number of years, we're going to control the cat.
Speaker Change: And I feel very good about our ability to control what we can and as we look to what's important for US we want to continue to deliver strong earnings performance in an environment that is very uncertain and very volatile and we feel very good about our ability to do that and that's of course behind the capabilities that we've invested in whether it be technology holistic margin management.
Speaker Change: Innovation give us a wide range of things to ensure we can continue to expand margin and deliver earnings performance. Obviously, we would like that to come with more topline growth, but given what's going on in the environments.
Speaker Change: We're planning to ensure that we can protect that earnings growth while.
Speaker Change: We want to be competitive in the marketplace and that's what we're focused on let's do both of those things and do them very well.
Speaker Change: And that'll be the theme around M&A at the salmon and we've done exactly that so we made two important divestitures in the last 18 months that strengthen the financial profile of our company, both supporting better topline growth better margin expansion and earnings profile.
Speaker Change: And we're always looking for ways to improve our portfolio over time, but job number one is ensuring that our core is healthy and I feel very good about all of the investments. We've made the capabilities, we've built to be able to control we can.
Speaker Change: And if there are opportunities, we certainly have a strong balance sheet good cash flow.
Speaker Change: And we would be ready if it was at the right value and we.
Speaker Change: We felt confident about our ability to navigate that moving forward.
Speaker Change: But again job one two and three is ensuring that we can control, we can and deliver strong earnings performance as we get through this period.
Speaker Change: Okay. Thank you I'll pass it on.
Speaker Change: Okay.
Our next question comes from Olivia Tong of Raymond James.
Speaker Change: Great. Thank you.
Speaker Change: The first question is just why do you think the destocking with more substantial in household and cleaning.
Speaker Change: And does it make you more or less concerned that there was some picking and choosing by the retailers even within everyday use categories in all categories to work down more than others and then a lot of your peers copyrighted. The recent performance with a view that consumers and retailers will eventually have to replenish.
Speaker Change: But I'm not sure I heard that same sentiment cheered by you beyond the ERP related challenges, obviously, one logically expect the consumer to replenish and the vast majority of these categories. Eventually, but do you think it takes longer for your categories. Thank you.
Speaker Change: If on household.
Speaker Change: As you said, Olivia we didn't have broad destocking or inventory adjustments across our portfolio. There were fairly limited to household and.
Speaker Change: And if you look at what's in that that set of goods, they're pretty heavy.
Speaker Change: Good that take up a lot of space you know who's got Kingsford, we've got litter.
Speaker Change: And so I think that's the mentality.
Speaker Change: And they're managing limited space Theyre trying to think about how they deal with those goods and again importantly, they are really not focused on doing this at the detriment of the consumer they're focused on ensuring consumer in stocks at the shelf and the virtual shelf are available theyre, just using more sophisticated technologies in some cases to ensure that they can manage that.
Speaker Change: Inventory more closely.
Speaker Change: And that's why it ended up in household I think has given just if theyre heavy goods and they're figuring out ways to ensure that they can maximize the space again I think this environment is dynamic could it happen in other places as they are adjusting it could right now we have more inventory.
Speaker Change: Adjustments planned for Q4 and household for the most part we're working with retailers everyday to ensure that they have the right level and we don't put consumers out.
Speaker Change: Out of stock.
Speaker Change: And then to your point on replenishment I think it's a really interesting question and that's something we're looking very carefully at is is there a bounce back for consumers as they potentially.
Speaker Change: Empty their pantries are using what inventory they have at home I would just say, it's very difficult to tell our purchase cycle of 90 days you haven't even been through a full purchase cycle when the downturn started in the middle of February.
Speaker Change: We're seeing some consumers buy smaller sizes does that mean, they're going to stretch that smaller size to lap that entire purchase cycle or will we see them come back sooner. It's just really too early to tell I think that'll be something we'll contemplate as we think about fiscal year 'twenty six guidance.
Speaker Change: Certainly in Q4 that we are seeing though is the back half of that purchase cycle. We continue to expect categories to be softer and it is definitely a question Mark you know how much inventory will be left in the households for a consumer perspective, and then what will that mean, but I think it would be logical to believe at some point consumers will go back to more normalized inventory level.
Speaker Change: <unk> et cetera, it's just the question Mark of went Olivia.
Speaker Change: Great. Thank you.
Speaker Change: Yeah.
Speaker Change: And our next question comes from.
Speaker Change: Chris Carey of Wells Fargo.
Chris Carey: Hi, everyone.
Chris Carey: I want to ask about productivity.
Chris Carey: So.
Chris Carey: Going to have tariffs, which are going to be.
Chris Carey: Packaging you next year.
Chris Carey: Youre also going to have.
Chris Carey: A bigger impact from ERP.
Speaker Change: Question. This evening, it's obviously going to be does that mean, you won't be able to grow earnings next year potentially I suppose we'll see what what you have to say in a few months.
Chris Carey: Right.
Chris Carey: Can you just talk about.
Chris Carey: Number one what you plan to do around tariff mitigation.
Chris Carey: And secondly does that.
Chris Carey: Involve accelerating productivity programs.
Chris Carey: Cover that and does that leave less to cover other headwinds like ERP or two.
Chris Carey: Drive incremental demand building activities.
Chris Carey: And related to that.
Chris Carey: Linda you had.
Chris Carey: You have a target around.
Chris Carey: SG&A as a percentage of sales were up 13% youre going to be thinking.
Think about a point and half higher than that this year does this fiscal 'twenty six.
Chris Carey: Are you.
Chris Carey: Some sort of impetus to accelerate that agenda, such that you know.
Chris Carey: Earnings be what they will next year, you're exiting fiscal 'twenty seven with a cleaner cleaner base.
Chris Carey: Much more much more resilient.
Chris Carey: That resilient, but.
Chris Carey: With with the targets that you wanted to achieve several years back.
Chris Carey: Any context on the productivity and also yesterday would be helpful. Thanks.
Speaker Change: Sure Chris.
Speaker Change: Maybe again this would be helpful wanted to step back on.
Speaker Change: And really just talk about the capabilities that we've built.
Speaker Change: And how we think they apply generally and then how we're thinking about applying them in fiscal year 'twenty six.
Speaker Change: We set out to build a stronger and more resilient company and that included investing a significant amount of money in our technology transformation.
Speaker Change: Investing in capabilities, a new operating model.
Speaker Change: And those were all designed to ensure that we could expand margin year after year and of course first job. One was return margins to gross margins to the levels that they were pre pandemic, which we've done.
Speaker Change: But then continue margin expansion that will allow us to invest in our business.
Speaker Change: And of course give returns to shareholders and we feel very good about the capabilities that we've built they have delivered outsized results over the last.
Speaker Change: Couple of years, you look at what we were able to deliver on some of those are just getting started and we talked about that at Cagny is as you look at.
Speaker Change: The tools that we have around price pack architecture et cetera. Those are things that we're just starting to implement and get value from.
Speaker Change: So when you step back I feel very confident in our ability to manage this overtime, but yes next year will be more of a challenge with more pressure given what Luke outlined on tariffs.
Speaker Change: You know, we're looking at about a year run rate of about $100 million worth of impact again, our exposure is relatively low but when you look at the number the amount of tariffs coming in these areas. It just ends up in that number.
Speaker Change: And we feel good about our ability to manage that $100 million in and do that overtime. So yes, we've we've expected more productivity from our company are already over the last couple of years and we'll continue to put pressure on productivity as we look to fiscal year 'twenty six and beyond with all of those tools that we built and we spoke about obviously, we're not committing to.
Speaker Change: What that looks like at this point, but those are the discussions we're having we talked about for example, our advertising spending is getting some of the best returns we've ever gotten so what does that mean in this environment. How do we think about advertising spending its incredibly important we're going to continue to invest strongly in our brands, but at what level makes the most of that amount of sense given the returns that we're getting so those are things that will.
Speaker Change: Talk about when we talk about fiscal year 'twenty six.
Speaker Change: But we feel good about our ability to manage this over the mid to long term and have all the right capabilities in the company and yes, we will get to M&A over time, and we've said that that wouldn't happen right away right now as you can imagine we're spending more as we implement that ERP, but once we have that implemented youll start to see that SMA over time.
Speaker Change: Come down corresponding to that and we're using all the tools to drive that productivity once we get through that transition.
Speaker Change: Okay.
Speaker Change: Thanks Rhonda.
Speaker Change: Thanks, Craig.
Speaker Change: And our next question comes from Steve powers of Deutsche Bank.
Speaker Change: Alright. Thanks.
Speaker Change: Good evening.
Speaker Change: And I guess.
Speaker Change: A question on K band.
Speaker Change: For all the value seeking behavior, we've seen over the past several months and quarters.
Speaker Change: Noted in your.
Speaker Change: Your opening remarks that we really haven't seen trade down in the traditional sense you should change shifting.
Speaker Change: Shifting but pretty much everything but traditional trade down.
Speaker Change: Yes, a couple of questions in there number.
Speaker Change: Number one why do you think that is because it's not just you have been.
Speaker Change: Observe this as you know.
Speaker Change: It would seem to me outside than what other companies have commented as well and as you look forward and you think about consumers.
Speaker Change: Essentially resuming a more normal purchase patterns.
Speaker Change: The replenishment that you talked about earlier.
Speaker Change: Do you see an increased risk that.
Speaker Change: As customers do come back and buy.
Speaker Change: Volume on a more to come.
Speaker Change: Normalized cadence that they're trading down as they do that or is that not something that you see on the horizon. Thank you.
Speaker Change: Yeah.
Speaker Change: Particularly in the U S and many of the markets that we're in.
Speaker Change: Really consumers value getting what they pay for it they want a product to work and I think fundamentally in our categories. We are essential categories, and you'll see that in essential categories well beyond our portfolio.
Speaker Change: Consumers outlay for a $5 for something 10 15, depending on the category and they want to make sure. It works.
And we've spent all of our history building that trust.
Speaker Change: Renewing to improve our products, ensuring that whatever consumer buys it does what we say, it's going to and consumers know that and they've tried other things before you know we have consumers, who tried alternatives and they come back to us because they recognize that it is a difference so I think broadly essentials hold up because.
Speaker Change: Companies have done the right thing they've invested to ensure those products continue to be a superior value to consumers in all ways.
Speaker Change: Any of that superior value, Steve is much more important than just whatever the juice or the stuff in the container is it how the container works that's how it fits in their pantry its all of those design elements.
Speaker Change: The fact that they experienced the feel.
Speaker Change: And we've worked really hard on that and we'll continue to prioritize it. It's why we talk about it all the time, that's what matters to the consumers. So I think that's what we're seeing right now as consumers know that and they're doing everything. Despite all the changes are having to make to their external wallet, they're doing everything they can to continue to have that experience, even if that means buying a smaller size or changing channels.
Speaker Change: Because they know what they're getting for the money theyre very very savvy.
Speaker Change: As we look ahead I would expect those value seeking behaviors to continue I think people will continue to be the channel shift I think they'll continue to think about what sizes. They buy I think theyre going to be very savvy about how they think about inventory at home.
Speaker Change: And I think they've been taught that over the last five years consumers going through Covid and inflation have had to be very very savvy and I think youre seeing what they learned in those last few years coming to fruition right now as they're dealing with what's going on I think the question Mark for US is and for everybody is to what degree does this volatility continue does it get worse.
Speaker Change: For consumers and they have to make additional tradeoffs and choices does that mean, they have to take a smaller size and extend keep the purchase cycle. The same and just use it less frequently does that put additional pressure to see them do what you would call traditional trade down trade to private label again, we've seen none of those signs right now, but it's something we're watching very.
Speaker Change: Very closely because it's just so uncertain and volatile out there and you can imagine a scenario where consumers are having to make much greater tradeoffs than they are today and what would that mean.
Speaker Change: But for US again controlling what we can it's continuing to invest in our brands continuing to ensure that we have the right messaging, we have the right promotion.
Speaker Change: We continue to improve our products, we continue to talk to consumers about the improvements that we're making in our products ensuring that all retailers.
Speaker Change: And then we offer them a great value wherever they shop, and we feel very confident in our abilities. Our brand's ability to navigate this I think it's just going to be what that shape looks like as consumers respond and unfortunately. This is one where I don't have a crystal ball I can't tell you what's going to happen next in the macroeconomic but I do feel very confident in our ability to navigate it and that our categories will.
Speaker Change: That better than others, given that we play in essentials.
Speaker Change: Okay.
Speaker Change: Thank you very much I appreciate it.
Speaker Change: Thanks, Steve.
Speaker Change: This concludes the question and answer session. Mr. Randall I would now like to turn the program back to you.
Randall: Thank you Paul.
Speaker Change: As we close today's call I'd like to step back and reflect on the number of macroeconomic environments. We've weathered as a company over our 112 years from.
Speaker Change: From inflationary recessionary environments, we have navigated them, well with strong execution and our portfolio of trusted brands for sure. We are seeing temporary category impacts given the very dynamic environment today, but history tells us that our essential categories are stable and resilient over the long run.
Speaker Change: While it's challenging to predict just how long this period will be we're confident in our ability to navigate this environment given our track record coupled with our enduring strategy.
Speaker Change: We are fundamentally strengthened our value creation model, including how we create the fuel necessary to drive growth, we're focused on delivering superior value their brands consumers love, we are creating a consumer obsessed faster and leaner organization by Reimagining, how we work in advancing our digital capabilities, we have taken steps to evolve our portfolio to reduce volatility and drive more profitable long.
Speaker Change: Term growth.
Speaker Change: This strategy has served us well as we transform clorox into a stronger company poised to deliver more consistent profitable growth and enhance long term shareholder value.
Speaker Change: Very importantly, we remain laser focused on delivering in both the short and long term.
Speaker Change: Thank you everyone. We look forward to updating you on our continued progress on our next call take care.
Speaker Change: Yeah.
Speaker Change: This concludes today's conference call.
Speaker Change: Thank you for attending.
Speaker Change: Yeah.