Q1 2026 The Clorox Co Earnings Call

November 3, 2025

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 anytime.

If anyone should require assistance during the conference. Please press star zero on your Touchtone pad at anytime.

As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference call Ms. Lisa <unk>, Vice President of Investor Relations for the Clorox Company Ms. <unk> you may begin your conference. Thank.

Thank you Jen good afternoon, and thank you for joining us on the call with me today are Linda Rundell, our chair and CEO and Luc <unk>. Our CFO. Please note that our earnings release and prepared remarks are available on our website at the Clorox company Dot com in just a moment Linda will share a few opening comments and then we'll take your questions.

During this call we may make forward looking statements, including about our fiscal year 2026 outlook. These statements are based on management's current expectations, but may differ from actual results or outcomes. In addition, we may refer to certain non-GAAP financial measures.

Please refer to forward looking statements section, which identifies various factors that could affect such forward looking statements, which has been filed with the SEC.

In addition, please refer to the non-GAAP financial information section in our earnings release, and the supplemental financial schedule in the Investor Relations section of our website for reconciliation of non-GAAP financial measures. The most directly comparable GAAP measures now I'll turn it over to Linda.

Thank you for joining us today in.

In Q1, we reached a major milestone in our transformation journey with the successful launch of our new ERP system in the U S.

This foundational step has strengthened our digital backbone and unlock new value streams for our company.

Launching the ERP was a significant undertaking and while the transition presented some challenges our team's resilience and adaptability allowed us to navigate them effectively and we're already been already seeing the benefits ramp up across our operations.

As we move forward, we've incorporated the realities of the implementation into our latest outlook and made the necessary adjustments to strengthen our plan for the remainder of the year.

Fortunately as we move past these temporary challenges we are fully focused on our demand creation plan to deliver superior value to our consumers and reinvigorate category growth with that Luke and I are happy to take your questions.

Thank you Ms Rendell, ladies and gentlemen, if you have a question. Please press star one on your Touchtone telephone.

Yeah.

And our first question today will come from Peter Grom with UBS.

Thanks, Thank you and good afternoon, everyone. So I just wanted to touch on the organic sales.

There are a lot of moving pieces, but just was.

Hoping to get some perspective on the second quarter as well as the balance of year. So just first can you just help us understand what you are including or embedding from a category growth perspective.

Then second you touched on returning to kind of sales growth or consumption growth in the back half as a result of the strong demand creation plan. So can you maybe just unpack that a bit more just what drives the confidence that trend one flat versus what we're seeing today.

Yes.

Thanks, Peter This is Luke and I can take that so I think when we look at the phasing for the full year outlook it might be easier to just exclude the impact of the ERP in both Q1 and Q4.

And if you do so.

Allegheny defense growth in the phone banks would be negative low single digits and organic sales growth in the back half would be positive low single digits.

The.

The assumptions are in the category will remain the same whereas assume that our U S retail category remain muted.

On average growing zero to 1% still below is the recall.

Average.

And so the improvement in the back half is really driven by improvement in consumption driven by it.

<unk> market share and there's two main levers. The first one is that we are launching a few major innovations in some key businesses in some cases, we are actually launching new platform in other expanding existing platform.

I think we talked about it last quarter. We are excited about innovation plans in the back half and we have strong demand plans in place.

And then the second thing is we are lapping some pretty negative trends that started in the back half of last fiscal year.

And Thats for U S retail outside U S. Retail, we feel we feel really good about the the.

The momentum of both the international and the professional business in the back half.

Now Q2, losing.

You asked a question about Q2, so contacts will be low single digits, and we expect Q2 to be in the low single digits, mostly.

We expect a continuation of the U S retail consumption trends that we've seen in the first quarter.

That as well as about a point of headwind from the timing of early shipments in the first quarter.

Okay. That's super helpful and just maybe more specifically on <unk>.

Just on that consumption point.

The decline Youre expecting can you maybe just be more specific than what you've seen through October and how you see kind of consumption trending from here or is it more or less what we've seen through the majority of <unk> or do you see any are you embedding any sort of improvement from here.

And Thats for U S retail and outside U S. Retail, we feel we feel really good about the.

Okay.

Yes, Peter there's some dynamics in October that would be helpful to cover.

The momentum of both the international and professional business in the back half.

Because there is definitely a difference if you are looking at the data between the first half of October in the second half. The first half is marked by a lap of what we saw last year with some storms hurricanes as well as port issues and although they werent very material to the quarter last year. They do create a year over year comparison issues. So you can.

Now Q2 loading.

You asked a question about Q2, so products will be low single digits, and we expect Q2 to be in the low single digits, mostly.

We expect a continuation of the U S retail consumption trends that we've seen in the first quarter.

That as well adds about a point of headwind from the timing of early shipments in the first quarter.

See we were down.

Fairly significantly in consumption in the first two weeks, which we expected now you've seen in the third and fourth week of October Thats rebounded significantly back to what we expected and you can see consumption down low single digits and <unk>. So that would be the dynamic I would expect is that current rate that we've seen over the last two weeks to continue.

Okay. That's super helpful and just maybe more specifically on Q.

Just on that consumption point decline Youre expecting can you maybe just be more specific on what you've seen through October and how you see kind of consumption trending from here or is it more or less what we've seen through the majority of <unk> or do you see any argument getting any sort of improvement.

For the remainder of the quarter, but outside of that we don't have any material things that you should focus on outside of what we provided in the outlook.

From here.

Yes, Peter there is some dynamics in October that would be helpful to cover.

Great. Thank you so much I'll pass it on.

Because there is definitely a difference if you're looking at the data between the first half of October in the second half. The first half is marked by a lap of what we saw last year with some storms hurricanes as well as port issues and although they werent very material to the quarter last year. They do create a year over year comparison issues Steve.

And our next question will come from Andrea Teixeira with JP Morgan.

Thank you. Good afternoon, I was hoping if you can touch a little bit on the environment for them promotions I mean, I understand you mentioned in the prepared remarks that you continue to see consumers being cautious and value seeking or hoping to see how the competitive environment unfolds.

Could see we were down fairly significantly.

Efficiently and consumption in the first two weeks, which we expected now you've seen in the third and fourth week of October Thats rebounded significantly back to what we expected and you can see consumption down low single digits and low so that would be the dynamic I would expect is that current rate that we've seen over the last two weeks to continue for.

And unfolded through the back half of October to Peter's question.

And then if you can also comment on.

The price pack architecture that Youre looking to do for our there is innovation that is coming in the backend back half of the year.

For the remainder of the quarter, but outside of that we don't have any material things that you should focus on outside of what we provided in the outlook.

We see you, becoming more I would say a meeting where the consumer is that in terms of like price points.

Great. Thank you so much I'll pass it on.

Anything to add there or in general what's embedded in your price and the price algorithm for organic sales growth in the second half.

And our next question will come from Andrea Teixeira with JP Morgan.

Thank you. Good afternoon, I was hoping if you can touch a little bit on them environment for promotions I mean, I understand you you mentioned in the prepared remarks that you continue to see consumers being cautious and value seeking or hoping to see how the competitive environment unfolds.

Hi, Andrea I'll start with your first one on the environment. So we're seeing the environment largely in line with what we had expected when we started the year and a continuation of what we saw in the back half of last year. As you noted the consumer continues to be under stress definitely reacting to the level of volatility and uncertainty.

And unfolded through the back half of October to Peter's question.

Thats out there and we're seeing that in their shopping behaviors. So while in aggregate the entire consumer wallet has been fairly stable the changes within that wallet have been quite significant.

And then if you can also comment on.

The price pack architecture that Youre looking to do for this innovation that is coming in the backend back half of the year.

And varying week to week and quarter to quarter.

Should we see you becoming more I would say a meeting where the consumer is that in terms of like price points.

Thats meant for our categories.

As you know we've seen a generally more competitive environment, although I would say it varies business to business.

Anything to add there or in general what's embedded in your price.

Category by category and what we're seeing in the specific competitive responses.

Price algorithm for organic sales growth in the second half.

We have seen increased promotions for example in the trash business in cat litter business.

Not different than we would've expected given the dynamics of those two categories.

We've seen some price changes both things it looks like promotional price changes turning permanent.

As well as some minor price price increases and so again it varies by category, but I would say on average the competitive environment seems pretty rational right now.

<unk> that's out there and we're seeing that in their shopping behaviors. So while in aggregate the entire consumer wallet has been fairly stable the changes within that wallet have been quite significant and varying week to week and quarter to quarter.

If you look at the overall promotional spending.

Again in some categories it was up but in aggregate across our categories not that material.

What that's meant for our categories.

And so what we are just responding to and continuing to watch very closely is will there be a change in the consumer environment that makes people become more competitive put more money in the system et cetera, we've seen retailers do some additional support on private label, although it hasnt yielded any private label share results.

As we've seen at generally more competitive environment, although I would say it varies business to business.

Category by category and what we're seeing in the specific competitive responses.

We have seen increased promotions for example in the trash business in cat litter business.

As of last quarter. So those are the things we're watching carefully but again, it's still it still remains a fairly rational environment, but I think people are getting very sharp on value depending on what matters to them in their portfolio and the category that we compete in there are a couple of places maybe that I would just call out that I think are.

Not different than we would've expected given the dynamics of those two categories.

We've seen some price changes both things it looks like promotional price changes turning permanent.

As well as some minor price price increases and so again it varies by category, but I would say on average the competitive environment seems pretty rational right now.

We're watching really carefully and one of them is food.

If you look at the overall promotional spending.

On an average on average the food category at large has been challenged and specifically when we look at the food category that we're in with salad dressing that category has been declining low single digits and very variable.

Again in some categories it was up but in aggregate across our categories not that material.

We've made adjustments to our plan I think you saw in the prepared remarks that large and small sizes in that business are working really well, but that's a good example of a place Andrea will be using price pack architecture fully to ensure that we're capturing the consumer wherever they are and offering them a hidden valley offering that is right for if they want to get the very best value per ounce or.

They can't afford to get that large size and they just need something in their pantry.

And that's going to get them through the next few meals.

I'd also note on the price pack architecture for the new innovation.

To what you saw in the prepared remarks, that's how we've approached all of these programs. So we've talked about we have some innovation coming in later that will definitely have components of price pack architecture built into it thinking about what are the right price points, we need to be out et cetera, as well all the innovations that we launched in the back half our teams have those tools now embedded in our innovation process in there.

We're watching really carefully and one of them is food.

Using them to ensure that we capture the full spectrum at launch and we can talk more about those when those innovations launched in the back half.

That's helpful and if I can squeeze in one for Luke on the gross margin side I understand that obviously, there was a lot of operational deleverage.

But you also mentioned commodities coming in I think slightly better if I'm not mistaken anything too to add to that in terms of like your flexibility.

They can't afford to get that large size and they just need something in their pantry.

Thats going to get them through the next few meals.

I'd also note on the price pack architecture for the new innovation.

So perhaps you know getting to.

To what you saw in the prepared remarks, that's how we've approached all of these programs. So we've talked about we have some innovation coming in litter that will definitely have components of price pack architecture built into it thinking about what are the right price points, we need to be at et cetera, as well all the innovations that we launched in the back half our teams have those tools now embedded in our innovation process in there.

A better range than guided I understand some of these ranges will go into the low end, but I was curious to see what has changed from a cost perspective that would inform you to be at the low end.

Sure Andrea maybe let me just speak first about what we're seeing from an inflation in general both commodity and supply chain and then talk about the different puts and takes as we look at the gross margin drivers for the full year outlook.

Using them to ensure that we capture the full spectrum at launch and we can talk more about those when those innovations launched in the back half.

That's helpful and if I can squeeze in one for Luke on the gross margin side I understand that obviously, there was a lot of operational deleverage.

So we.

If I look at overall inflation, we expect it to continue to remain moderate I would say for the year.

You did mention it's a slightly more favorable than our prior estimate in July.

But you also mentioned commodities coming in I think slightly better if I'm not mistaken anything to add to that in terms of like your flexibility.

If you remember at the beginning of the year, we assume that input cost inflation with increased a little under $90 million for the full year.

So perhaps you know getting to.

About us coming from commodities and I was coming from supply chain, both manufacturing and logistics.

A better range than guided I understand some of these ranges will go into the low end, but I was curious to see what has changed from a cost perspective that would inform you to be at the low end.

Our latest projection assume that input cost inflations would increase about $70 million, so about $20 million more favorable.

Again about half of that is really coming commodities and also that is coming from the rest of the supply chain.

Sure Andrea maybe let me just speak first about what we're seeing from an inflation in general in both commodity and supply chain and then talk about the different puts and takes as we look at the gross margin drivers for the euro.

Now we also have to contend with tariff and right now our estimates, Ontario fees remained the same it's about a headwind of $40 million.

Luke.

So we.

Yeah. So.

If I look at overall inflation, we expect it to continue to remain moderate I would say for the year.

Looking at.

All of it together this is about $110 million of about 20 million more favorable than what we thought at the beginning of the year.

We did mention it's a slightly more favorable than our prior estimate in July.

Now there's a few other.

If you remember at the beginning of the year, we assume that input cost inflation with increased a little under $90 million for the full year.

Puts and takes as we look at the gross margin for the full year.

One we did up between crew additional expenses during the first quarter to deal with the disruptions on the demand fulfillment related to the ERP ramp up being little slower than expected so thats incremental expenses.

And with about half coming from commodities and upcoming from supply chain, both manufacturing and logistics.

Our latest projection assume that input cost inflations would increase about $70 million, so about $20 million more favorable.

That offset some of the benefits and then second where as the teams are finalizing and optimizing their demand creation plans for the innovation in the back half.

And again about half of that is really coming commodities and alcohol that is coming from the rest of the supply chain.

Now we also have to contend with tariff and right now our estimates antara fees remained the same it's about a headwind of $40 million.

We increased a little bit both trade spending and advertising. So the trade spending is also putting more pressure. So at this point, it's a little more towards the lower end of the range, but keep in mind.

So.

Looking at.

All of it together this is about $110 million of about $20 million more favorable than what we thought at the beginning of the year.

We expect to have more movement going through year, what's important is we generally feel good.

Now there's a few other.

Our ability to meet our gross margin outlook.

Puts and takes as we look at the gross margin for the full year.

And if I may say.

If I look at the back half of the year, you should see pretty robust gross margin expansion in both Q3 and Q4.

One we did between crew additional expenses during the first quarter to deal with the disruptions on the demand fulfillment related to the ERP ramp up being a little slower than expected so thats incremental expenses.

Thank you Linda Thank Luke I'll pass it on.

And we will move next to Cuomo, Gotcha, where Waller with Jefferies.

That offset some of the benefits and then second where as the teams are finalizing and optimizing their demand creation plans for the innovation in the back half.

Hey, guys.

Digging in just a little bit on maybe your report card because there's so many moving parts.

And so all of that when you when you are making adjustments for how do you feel about your market shares.

Are they trending in the direction that you prefer the opposite.

So it's a little hard to read given everything that's going on I'm curious, where you are in and later and I guess on top of that.

We expect to have like more movement going through year. What's important is we generally feel good.

You sort of hinted at a few things on more demand creating activities do you do you have the all clear from an infrastructure perspective to go and pursue them in.

About our ability to meet our gross margin outlook.

And if I may say.

If I look at the back half of the year, you should see pretty robust gross margin expansion in both Q3 and Q4.

So maybe just some more details on what it is and how much you expected to contribute.

Yes, maybe what I can do commodities, just unpack a little bit what was the underlying performance of the first quarter because it was so much noise. So let me stop there and then.

Thank you Linda Thank Luke I'll pass it on.

And we will move next to Cuomo gosh over Wala with Jefferies.

Hey, guys.

Maybe Linda can provide any more perspective on the.

Digging in just a little bit on maybe your report card because theres. So many moving parts.

Underperformance in the market.

So if we look at Q1.

ERP and <unk> all of that when you when youre, making adjustments for how do you feel about your market shares.

Organic sales, excluding the impact, albeit lumpy.

<unk> sorry.

We declined about three points and even within this three point there was a few things happening one there was one.

Are they trending in the direction that you prefer the opposite.

So it's a little hard to read given everything that's going on I'm curious, where you are in and later on I guess on top of that.

Favorable point of timing, which is really just the timing shifts between Q2 and Q Q1 related to some early shipments.

You sort of hinted at a few things on more demand creating activities do you do you have the all clear from an infrastructure perspective to go and pursue them in.

Merchandising in the second quarter.

But we also had the impact of the out of stock, which impacted both our market share and maybe to some extent some categories in some businesses and that was about three points of headwinds.

So maybe just some more details on what it is and how much do you expect it to contribute.

Yeah, maybe if I can do commodities, just unpack a little bit.

So again, if you unpack that.

What was the underlying performance of the first quarter because it was so much noise. So let me stop there and then.

<unk> the decline of three points in the first quarter and exclude those two levers like the underlying performance was about negative one alright. So that gives you some context and also kind of just really consistent with what we signaled.

Maybe Linda can provide any more perspective on the.

On the performance in the market.

So if we look at Q1 organic sales, excluding the impact, albeit lumpy.

Around the front as being in the <unk>.

A negative low single digits.

<unk> sorry.

We declined about three points and even within this three point there was a few things happening one there was one.

Okay.

Sure.

Go ahead. Daniel go ahead, I was just going to.

I was just going to ask you too.

Favorable point of timing, which is really just the timing shifts between Q2 and Q Q1 related to some early shipments.

Perfect. So on share and just how that translates to the market.

Unfortunately, with the ramp up that we had on our ERP. It did cause us to lose more market share than we had anticipated and you saw that primarily impact August in a material way, we saw September a bit better and again in October continues that trend, but we can't say, we're satisfied with that.

For merchandising in the second quarter.

But we also had the impact of the out of stock, which impacted both our market share and maybe to certain extent.

Some categories in some businesses and that was about three points of headwinds.

So again, if you unpack that.

We intend to grow market share over the long term and so we are laser focused on that as we head into Q2 and the back half of the year and that's why you're seeing us continue to.

Around the front as being in the <unk>.

Refine and tune our plans, which we feel good about in the back half feel great about the innovation that we have feel good about the spending levels, we have and I think what that also connects to as the other parts of the scorecard that will make up share and give us confidence in our ability to.

<unk> low single digits.

Okay.

Sure.

Go ahead Danielle go ahead.

I was just I was just going to ask you too.

Perfect. So.

On share and just how that translates to the market.

To grow share again in the back half and that's household penetration, which remained stable in fact, if you look at our biggest Mega brand Thats up in household penetration the clorox brand and up fairly significantly our consumer value metric remains higher significantly higher than it was pre COVID-19.

And again, we have all of the right spending in tools and innovation in that plan to drive market share performance, so while not satisfied right now.

With that we intend to grow market share over the long term and so we are laser focused on that as we head into Q2 and the back half of the year and that's why you're seeing us continue to.

I feel like we have the right plans to get that turned around and the fundamentals of our business remain very strong.

Got it thank you.

And we'll move next to Filippo for <unk> with Citi.

Hi, good afternoon, everyone.

So maybe following up on <unk> question, just on the second half Linda you mentioned a lot of the improvement is based on the innovation plans that you have that you have for the second half of the year can you give us a little more color on what categories of innovation is going what differentiate and kind of what gives you that car.

To grow share again in the back half and that's household penetration, which remains stable. In fact, if you look at our biggest Mega brand Thats up in household penetration the clorox brand and up fairly significantly our consumer value metric remains higher significantly higher than it was pre COVID-19.

Innovation will work.

And then maybe you can give a specific drill down a little bit more on trash bag and Cal later those continue to remain two of the most challenged category is and you mentioned increased promotional activity. So maybe just a review on the plans on those two particular categories as well. Thank you.

And again, we have all of the right spending in tools and innovation in that plan to drive market share performance, so while not satisfied right now.

I feel like we have the right plans to get that turned around and the fundamentals of our business remain very strong.

Got it thank you.

Sure Filippo.

And we'll move next to Filippo for <unk> with Citi.

And innovation, maybe I'll talk about some of the ones that we just launched at our end market now and that we have the ability to speak a bit more about in glad we're continuing to build on the very successful <unk> platform that we have.

Hi, good afternoon, everyone.

So maybe following up on <unk> question, just on the second half Linda you mentioned a lot of the improvement is based on the innovation plans that you have you're absolutely the sort of thing.

You've heard us talk about Bahama Bliss, which was the last big sense.

Half of the year.

That we had released and were following that with a false sense.

Can you give us a little more color on what categories of innovation is going and what differentiate and kind of what gives you that confidence that innovation will work and then maybe you can give us specific I drill down a little bit more on trash bag and Cal later those continue to remain two of the most challenge.

Which we think will do very well for glad and continue to attract that consumer that's looking for that extra piece of treat at home given what they're going through.

And Britta we are active are actively monitor modernizing our pictures with new colors. We're also ensuring that we're doing price pack architecture, there to ensure we're capturing consumers.

Category is and you mentioned increased promotional activity. So maybe just a review on the plans on those two particular categories as well. Thank you.

Who can't afford to buy a larger picture at the moment.

<unk>.

So smaller sizes for both pictures and filters and that gives consumers.

Sure Filippo.

And innovation, maybe I'll talk about some of the ones that we just launched that our end market now and that we have the ability to speak a bit more about in glad we're continuing to build on the very successful <unk> platform that we have.

A reason to not turn away from our brita pitcher on births, we've expanded a very successful platform.

<unk> launched a boosted bomb a while back and we're increasing the.

You've heard us talk about Bahama Bliss, which was the last big sense.

A footprint of that and launching that antibody and we just launched innovations including.

Including a lotion with utter and moisturizing out theyre quite theyre quite delightful and I think the consumers are really going to like them. So those just came out and we're feeling good about those we will have additional innovations in the way I would think about it Filippo is that we will have innovations across all of our major brands. This year.

That we had released and were following that with a false sense.

Which we think will do very well for glad and continue to attract that consumer that's looking for that extra piece of treat at home given what they're going through.

And Britta, we've active are actively monitor modernizing our pictures with new colors. We're also ensuring that we're doing price pack architecture, there to ensure we're capturing consumers.

And so youll see those coming in the back half.

Some of these innovations are brand new spaces for us in terms of what we are going after from a consumer perspective, and and what <unk>.

Who can't afford to buy a larger picture at the moment.

<unk>.

Some smaller sizes for both pictures and filters and that gives consumers.

Problems, we're trying to solve for them and then some of them build again on existing capabilities that we already have and I know you you can understand that I cant get into exactly where those are right now, but I think the key takeaway is innovation across all major brands feel really good about the innovation that we launched in Q1 very good about the back half we have the right spending.

A reason to not turn away from our brita pitcher on births, we've expanded a very successful platform.

<unk> launched a boosted bomb a while back and we're increasing the.

<unk> footprint of that and launching that into body and we just launched innovations, including a lotion with utter and moisturizing up there quite they are quite delightful and I think the consumers are really going to like them. So those just came out and we're feeling good about those.

And I think they are the right mix between continuing to improve the base.

And bringing new to world innovations at our superior value to consumers and that we think we can create you know years and years of value from.

We will have additional innovations in the way I would think about it Filippo is that we will have innovations across all of our major brands. This year.

Great and maybe just just one.

And so youll see those coming in the back half.

On trash bags and litter.

Some of these innovations are brand new spaces for us in terms of.

We've seen continued pressure from market share standpoint, so maybe can you give us a samsung assessment all of those categories.

What we are going after from a consumer perspective and and what.

How sustained is promotional environment, Ken can remain in those categories. Thank you.

Problems, we're trying to solve for them.

And then some of them build again on existing capabilities that we already have and I know you you can understand that I cant get into exactly where those are right now, but I think the key takeaway is innovation across all major brands feel really good about the innovation that we launched in Q1 very good about the back half we have the right spending and I think they are the right mix between <unk>.

Yes on both of those categories. They are largely what we expected to see which is very competitive more promotional activity.

Continued.

Innovation and we're seeing about in line with what we expected to see in both of those.

Of course.

Q1 was impacted by our implementation of the ERP. So we saw a bit more share decline than we had expected.

<unk> to improve the base.

And bringing new to world innovations that are superior value to consumers and that we think we can create years and years of value from.

But obviously once we're back in stock and we for the most part are now we've began to see those shares rebound.

Great and maybe just just one.

But both of those continue to be marked by higher than normal competitive activity and we see that in pricing, we see that in additional promotional spending.

On trash bags and litter.

We've seen continued pressure from market share standpoint, so maybe can you give us a sense your assessment of those categories.

And what we're trying to balance in both categories and particularly on trash would be the long term value creation aspects of this we do not want to get into a place where we're destroying value in the category because.

How sustained is promotional environment, Ken can remain in those categories. Thank you.

Yes on both of those categories. They are largely what we expected to see which is very competitive more promotional activity.

Because we just don't see people create a lot more trash when a trash bag as more discounted and what we're trying to do is ensure that we preserve the right to grow this category through innovation and better consumer ideas and experiences.

Continued innovation and we're seeing about in line with what we expected to see in both of those.

Of course.

So we're being very choice fall there are places, where we have increased our investment in glad we're being very surgical about that and there are places where we're willing to lose a bit of share in the short term and service of that long term objectives. So thats, what we think we're getting the balance right now.

Q1 was impacted by our implementation of the ERP. So we saw a bit more share decline than we had expected.

But obviously once we're back in stock and we for the most part are now we've begun to see those shares rebound.

But both of those continue to be marked by higher than normal competitive activity and we see that in pricing, we see that in additional promotional spending.

We're going to watch it really carefully in Q2 and the back half we want to execute our innovation with excellence, but I would say you know that category is very much what we expected to see later of course, you know in a place where the category is growing and we're not getting our fair share of that that's highly disappointing to all of us.

And what we're trying to balance in both categories and particularly in trash would be the long term value creation aspects of this we do not want to get into a place where we're destroying value in the category because.

We feel good about the plans we have on literally in the back half.

We'll talk more about those.

And our next call.

But we will go after all of the things that we think are working quite right for us in litter right now.

And we.

We're hopeful that that will show a marked turnaround in the back half once we get that implementation and market.

Got it thank you very much thanks.

Thanks Filippo.

And our next question will come from Chris Carey with Wells Fargo.

Okay.

Hey, everyone.

We're going to watch it really carefully in Q2 and the back half we want to execute our innovation with excellence, but I would say you know that category is very much what we expected to see litter of course in a place where the category is growing and we're not getting our fair share of that is highly disappointing to all of us.

Yes.

My first question is just around the.

<unk> spending.

Spending plans for the back half.

I'm, mostly curious.

Now these have evolved.

We started the year.

And what I'm, specifically interested in US are we talking about you have these great innovation youll be leaning in more and Theyre basically funding that with.

We feel good about the plans we have a letter in the back half.

More about those.

And our next call.

But we will go after all of the things that we think are working quite right for us in litter right now.

Gross cost savings that youre getting from more favorable commodities or are you looking at the broader suite of activities.

And.

We're hopeful that that will show a marked turnaround in the back half once we get that implementation in market.

That you can drive.

Got it thank you very much.

Greater outcomes beyond even those innovations.

Hi, Bob.

And our next question will come from Chris Carey with Wells Fargo.

And just is there a way to thinking about it between promotional activity advertising I have a follow up.

Hey, everyone.

I will start Chris.

My first question.

So yeah on the spending plans for the back half and we started the year. We felt very good about them to begin with we have pretty sophisticated tools that allow us to put money.

Is just around the.

<unk>.

Spending plans for the back half.

I'm, mostly curious.

These have evolved.

Where we know we're going to get a good return you've heard us talk about the personalization engine that we've built that allows us to target consumers in a way that gets some messaging that's driving very good rois and we have one of the leading ROI.

Since we started the year.

And what I'm, specifically interested in US are we talking about you have these great innovation youll be leaning in more and Theyre basically funding that with.

And the industry from an advertising perspective, so we already felt strongly about our plans heading into the back half.

The grille.

Gross cost savings that youre getting from more favorable commodities or are you looking at the broader suite of activities.

We took an opportunity to do with as consumers are adjusting their their behaviors, we've adjusted our plans.

That you can drive greater outcomes beyond even those innovations.

To sharpen that spending in the back half I'll give you. Some examples some of it is innovation as we've gotten clearer on what distribution looks like and what retailers plan to do we've made adjustments in spending on retail media. We have made adjustments in spending in advertising or how we might do a promotional kickoff and a retailer those are the things.

And just is there a way to figure out between promotional activity that advertising I have a follow up.

I will start Chris.

So yeah on the spending plans for the back half and we started the year. We felt very good about them to begin with we have pretty sophisticated tools that allow us to put money.

The teams have done in addition, I'll give you. An example in Kingsford we saw that many consumers are doing exactly what they are in other categories from a value perspective, they are either trading up to larger sizes or are they are looking for an opening price point. So for really the first time in July four and labor day.

Where we know we're going to get a good return you've heard us talk about the personalization engine that we've built that allows us to target consumers in a way that gets some messaging that's.

Driving very good Rois and we have one of the leading ROI.

And the industry from an advertising perspective, so we already felt strongly about our plans heading into the back half.

We had much more merchandising on smaller sizes and larger sizes actually grew household penetration as a result of that plan and we adjusted that spending based on the learnings we had from Memorial day, where we talked about the merchandising plan did not go as we had anticipated and we didn't execute to the degree we wanted to we made those adjustments and July 4th and Labor day and are taking those four.

We took an opportunity to do with as consumers are adjusting their their behaviors, we've adjusted our plans.

To sharpen that spending in the back half I'll give you. Some examples some of it is innovation is we've gotten clearer on what distribution looks like and what retailers plan to do we've made adjustments in spending on retail media, we've made adjustments in spending on advertising or how we might do a promotional kickoff and a retailer those are the things.

As we look at the back half of the year. So it's across a number of things Chris we're using the tools that we have at the consumer understanding that we're getting and making real time adjustments with retailers.

The teams have done. An addition, I will give you. An example in kingsford we saw that many consumers are doing exactly what they are in other categories from a value perspective, they are either trading up to larger sizes or they're looking for an opening price point. So for really the first time in July four and labor day.

To try to capture as much of the change as we possibly can.

And because we feel very confident about our ability to deliver strong returns on that on that advertising, we feel confident about the choices that we've made and frankly, we will probably continue to make adjustments as we learn more.

And our business units are fully empowered to do that and and are watching the consumer carefully and we'll make adjustments if they need to to support innovations or the base.

Okay. Thank you one follow up.

<unk> seen an increase in.

Yeah.

Our portfolio actions I guess, if you can call them at a number of companies across consumer staples to respond or maybe adjusted.

Third as we look at the back half of the year. So it's across a number of things Chris we're using the tools that we have at the consumer understanding that we're getting and making real time adjustments with retailers.

Demand backdrops.

Yes, Im conscious you have a fairly diverse portfolio.

To try to capture as much of the change as we possibly can.

A very clean balance sheet.

Called out certain categories that have been more volatile than what you wanted perhaps there are others, where you would want to play board. So just you know in this environment with the balance sheet you have.

And our business units are fully empowered to do that and and are watching the consumer carefully and we'll make adjustments if they need to to support innovations or the base.

The volatility we're seeing can you give us maybe.

And how you're thinking about the concept of portfolio.

And what Youre really trying to accomplish with your own and how you think about maybe.

Okay. Thank you one follow up.

<unk> seen an increase in.

Any future evolution. Thanks, so much.

Yeah.

Our portfolio actions I guess, you can call them at a number of companies across consumer staples to respond or maybe adjusted.

Sure Chris.

First I think the most important principle, we have as we always take a long term focus when it comes to our portfolio and so there is certainly a lot of things going on right now some of which is just noise and temporary.

Different demand backdrops.

Yes, I'm conscious you have a fairly diverse portfolio.

And some of which we'll see does it turn more permanent is there a change in the consumer environment that we need to account for any company needs to account for but.

A very clean balance sheet.

Called out certain categories that have been more volatile than what you wanted perhaps there are others, where you'd want to play board. So just you know in this environment with the balance sheet you have.

We're staying very disciplined and taking a long term portfolio focus and that plays itself out in two very important ways. The first and the most important is that we strengthen our core and that we take the brands that we have that are in the vast majority of U S households, and in household all around the world and we offer better value to consumers.

The volatility we're seeing can you give us maybe.

And how you're thinking about the concept of portfolio.

And what you are really trying to accomplish with your own and how you think about maybe.

We invest in those brands.

And we get to the place, where we're pretty consistently growing market share growing household penetration et cetera, and we've seen moments of that over the last several years and it's certainly been choppy given the external environment.

Any future evolution. Thanks, so much.

Sure Chris.

First I think the most important principle, we have as we always take a long term focus when it comes to our portfolio and so there are certainly a lot of things going on right now some of which is just noise and temporary.

And some of the challenges we've had on our own but that's our number one focus and I feel.

Better than I have in a long time around the innovation plans that we have.

And some of which we'll see does it turned more permanent is there a change in the consumer environment that we need to account for any company needs to account for.

And the ability for those to continue to grow our market share in household penetration over the long term, we have plenty of opportunities in our core business to get better and sharper.

We're staying very disciplined and taking a long term portfolio focus and that plays itself out in two very important ways. The first and the most important is that we strengthen our core and that we take the brands that we have that are in the vast majority of U S households, and in households, all around the world and we offer better value to consumers.

And deliver profitable growth and of course, the second component of that is actively with our board all the time looking at our portfolio to ensure that we have the right portfolio moving forward and you've seen us make a few moves, albeit on a smaller side, but very important we divested our business in Argentina, which had driven.

We invest in those brands.

The vast majority of the currency volatility, we had experienced as well as divesting the business for vitamins minerals and supplements, which unfortunately did not contribute what we had anticipated it would in a series of the two acquisitions that we made and that is delivering real results.

Some of the challenges we've had on our own but that's our number one focus and I feel.

Better than I have in a long time around the innovation plans that we have and the ability for those to continue to grow our market share in household penetration over the long term, we have plenty of opportunities in our core business to get better and sharper.

Everyday in the portfolio and we are always looking with our board at all options for our portfolio, whether that be tuck ins continuing to expand on <unk>.

CAGR that we play in today or looking of course at more transformational things just as you would expect us to with our board, but we will remain disciplined the good news is we do have a strong balance sheet. So if there is something that we think is attractive from a shareholder perspective, we have the ability to act on it.

And deliver profitable growth.

Of course, the second component of that is actively with our board all the time looking at our portfolio to ensure that we have the right portfolio moving forward and you've seen us make a few moves, albeit on a smaller side, but very important we divested our business in Argentina, which had driven the vast majority of the currency volatility.

But we want to make sure that we are taking a long term view always and not chasing some short term temporary disruption.

And setting ourselves up for a good long term shareholder returns.

We had experienced as well as divesting the business for vitamins minerals and supplements, which unfortunately did not contribute what we had anticipated it would and a series of the two acquisitions that we made and that is delivering real results.

Okay. Thank you.

Our next question will come from Ana <unk> with Bank of America.

Hi, good afternoon. Thanks, so much for the question.

Everyday in the portfolio and we are always looking with our board at all options for our portfolio, whether that be tuck ins continuing to expand on <unk>.

Just wanted to ask we're hearing from peers in the space that there is some destocking here from certain retailers and I suppose with the ERP transition you're not as exposed to that right now, but I was wondering if you can comment on this inventory trends and as we see our retailers shift to club and online from consumers I was wondering how you are looking to.

Increase your exposure here.

In the past that glad was a brand that has significant competition from the club channel.

But we want to make sure that we are taking a long term view always and not chasing some short term temporary disruption.

Any innovation you can mention with this in mind in terms of your offerings to have phase II.

And setting ourselves up for a good long term shareholder returns.

Retailers pick up new products and new pack sizes. Thank you.

Sure and on Destocking, you are right to assume that our ERP would of course have the opposite effect because we were rebuilding inventories with retailers as we got through that period.

Okay. Thank you.

Our next question will come from Ana <unk> with Bank of America.

Hi, good afternoon. Thanks, so much for the question.

So largely we're not seeing any material destocking behavior impacting results.

And largely what we continue to see from retailers as they are doing the good structural work you would want to reduce inventories across the value chain.

And that's good for everybody over the long term, but we don't see anything in the short term and again that could change as retailers plans change.

That are impacting our business and we have largely.

To increase your exposure here.

Recovered our inventories from the period during the ERP implementation disruption.

In the past that glad was a brand that had significant competition from the club channel.

And any innovation you can mention with this in mind in terms of your offerings to have these retailers pick up new products and new pack sizes. Thank you.

But again at this point, we're not seeing anything material that we that would.

That we would call out for this quarter or for the remainder of the year.

And on Destocking, you are right to assume that our ERP would of course have the opposite effect because we were rebuilding inventories with retailers as we got through that period.

On the cloud business, we have a very strong club business.

Across many of our businesses and we do focus on specific innovation for the club member and shopper just like we do for the grocery channel and for the dollar channel and for E. Commerce, We're looking to combine the moment of truth with what the product offering needs to be and so we work very closely with our club.

So largely we're not seeing any material destocking behavior impacting results.

And largely what we continue to see from retailers as they are doing the good structural work you would want to reduce inventories across the value chain.

And that's good for everybody over the long term, but we don't see anything in the short term and again that could change as retailers plans change.

Customers and others to ensure that we're getting the right member value for them.

And we've been doing that for many many years, which means we have very strong positions in club now you're right that we've called out glad as being a place where we have less of.

That are impacting our business and we have largely.

<unk> recovered our inventories from the period during the ERP implementation disruption.

Our position in club, we continue to work on opportunities there to ensure that we're providing the right value and potentially unlock different distribution opportunities, but for now what we're focused on is ensuring consumers who want a large.

But again at this point, we're not seeing anything material that we that would.

That we would call up for this quarter or for the remainder of the year.

On the cloud business, we have a very strong club business.

Count of trash bags can get them in other places.

Many of our businesses and we do focus on specific innovation for the club member and shopper just like we do for the.

Obviously, we have very strong distribution across other channels that also sell large sizes and so we're focused on that and focused on the club customers, where we have good distribution.

The grocery channel and for the dollar channel and for E. Commerce, We're looking to combine the moment of truth with what the product offering needs to be and so we work very closely with our club customers and others to ensure that we're getting the right member value for them and.

But I think I feel very good largely about where we are in club and our ability to specifically target innovation that's.

That provides great member value.

Okay, and just one follow up on private label.

While the overall share is more muted in terms of growth.

And we've been doing that for many many years, which means we have very strong positions. In club now you are right that we've called out glad as being a place where we have less of.

We're still seeing some increases in categories like wipes. So I'm curious for your thoughts here relative to private label share and the increase that we're seeing versus on the branded side.

Okay.

Yes, so in aggregate, we have not seen private label make any material inroads in aggregate, but there are a couple of categories. We call it actually wouldn't call. It wipes as being one of the categories that we have concern about.

Count of trash bags can get them in other places.

Obviously, we have very strong distribution across other channels that also sell large sizes and so we're focused on that and focused on the club customers, where we have good distribution.

Or are watching carefully, but actually Brett is one that we're watching carefully right now we've seen some consumers trade down to private label filters and smaller sizes and so we have reacted with ensuring that we have the right lineup of pictures.

But I think I feel very good largely about where we are in club and our ability to specifically target innovation that's.

That provides great member value.

And filters and making sure that we're having the right value there, but that's one place we're watching very carefully.

Okay, and just one follow up on private label.

We've seen this behavior in the past when consumers are under stress.

While the overall share is more muted in terms of growth.

A substitution here and there.

We're still seeing some increases in categories like wipes. So I'm curious for your thoughts here relative to private label share and the increase that we're seeing versus on the branded side.

For a lower priced private label filter, but that's.

That's a place that we've been watching pretty carefully.

And then I would say in bleach would be the other place that we're watching very carefully generally are cleaning portfolio is doing very very well, particularly against private label and we're seeing consumers across the whole value spectrum, all the way from dilutive bowls up to wipes.

Looking for that premium experience, we continue to see.

Our watching carefully but actually Brett is one that we're watching carefully right now we've seen some consumers trade down to private label filters and smaller sizes and so we have reacted with ensuring that we have the right lineup of pitchers.

<unk> overall share performance in home care, obviously, it was impacted by the out of stocks that we had in Q1.

But we're seeing that bounce back, but bleach is a place we're watching carefully we have seen a bit of private label uptick we feel like we have good bleach plans in the back half and that's a place where we had targeted strengthening the plan in the back half, but those are two categories that were watching very carefully.

And filters and making sure that we're having the right value there, but that's one place we're watching very carefully.

We've seen this behavior in the past when consumers are under stress.

Then they make a substitution here and there for a lower priced private label filter, but that's.

And watching particularly lower income consumers to see what their behaviors are.

That's a place that we've been watching pretty carefully.

Adjusting our plans to make sure that we have an offering from clorox that meets their needs.

Great. Thank you so much.

Yeah.

And our next question will come from Bonnie Herzog with Goldman Sachs.

Thank you hi, everyone I wanted to circle back on your guidance for organic sales growth guidance of the declines that are expected a negative five 9%.

Looking for that premium experience, we continue to see.

<unk> overall share performance in home care, obviously, it was impacted by the out of stocks that we had in Q1.

Just hoping for a little bit more color on the puts and takes of that you know you highlighted your current expectations are for you now.

To be at the lower end of the range, but just curious at the high end of this range is achievable and if so what would the drivers of that and then just a quick clarification of the inventory unwind was there maybe a greater unwind than you expected and any areas of your business. Thanks.

And watching particularly lower income consumers to see what their behaviors are.

Adjusting our plans to make sure that we have an offering from clorox that meets their needs.

Okay.

Yes, Thanks, Mani I can I can take that.

Great. Thank you so much.

First on your last questions I think.

Got it.

We generally feel good about our inventory positioning at the end of the first quarter. So that you probably noticed we refined the estimate of the incremental shipment associated with ERP transitions.

And our next question will come from Bonnie Herzog with Goldman Sachs.

Thank you hi, everyone I wanted to circle back on your guidance the organic sales growth guidance of the declines that are expected a negative five 9%.

From a range of seven to eight points of negative headwind in fiscal 2006 to a point estimate of seven in Ohio.

Just hoping for a little bit more color on the puts and takes of that you know you highlighted your current expectations are for two.

And just the background there I think we've talked about it last quarter, but we had a pretty robust.

Tracking process in place to triangles incremental.

Orders, but there is also an element of triangulation is as you probably know some of our customers have algorithm based ordering systems and so we really needed to wait for the end of the first quarter to kind of finalize the system. It so.

Okay.

Again pretty good about the current retailer inventory position at the end of the Q1 and we feel so good about now.

Yeah. Thanks, Bonnie I can I can take that.

First on your last questions I think.

We generally feel good about our inventory positioning at the end of the first quarter. So that you probably noticed we refine the estimates of the incremental shipment associated with ERP transitions.

Now having finalized the estimate of the ERP transition.

Having said that.

Maybe when we look at looking at the outlook for organic sales growth range I think a few things that's worth mentioning one we're still early in the year.

From a range of seven to eight points negative headwind in fiscal year 2006 to a point estimate of seven in Ohio.

And second.

It's a pretty wide range.

Given the environment.

And just the background there I think we've talked about it last quarter, but we had a pretty robust.

That was the breadth of the range was a deliberate choice because it allows us to really remain agile and realistic as we navigate the.

Cross tracking process in place to try this incremental.

The market dynamic in the external environment during the year. So it is a wide range. So when you look at the higher end of the range, having said that.

It's fair to say that we would need.

<unk> on that our assumptions to meet on the high end for us to to meet the higher end and it would be pretty robust.

Again, good about the current retail inventory position at the end of the Q1 and we feel so good about now.

Sales in the back half so that means category growth would be on the higher end of our estimates one points on average for U S retail, Ohio second we would have a great execution on innovation and demand creation plan and then third of course.

No.

Finalize the estimate of the ERP transition.

Having said that.

Maybe when we look at looking at the outlook for the organic sales growth range I think a few things that's why I mentioned the one we're still early in the year.

And assuming no supply or extraneous issues coming up as we continue through the year. So.

And second.

That's why we need to be true.

So pretty wide range.

Okay. Thank you I'll pass it on.

Given the environment.

That was the breadth of the range was a deliberate choice because it allows us to really remain agile and realistic as we navigate the.

Yeah.

We'll move next to Olivia Tong with Raymond James.

Great. Thanks.

The market dynamic and external environment during the year. So it is a wide range. So when you look at the higher end of the range, having said that.

Good evening.

You mentioned in your prepared remarks, your category growth rates have stabilized even if they were lower than historical.

It's fair to say that we would need a REIT.

What are you seeing that underlies your confidence in that stabilization because many of your peers seem concerned that things could.

<unk> two <unk> on that our assumptions to meet on the high end for us to meet the higher end and it would be a pretty robust.

Could get worse through basically first half of calendar 'twenty six and I think you mentioned flat to plus one category growth at the moment are you expecting that to get better as time progression progressing or is it more about your innovation and other actions that are driving that share driving some share opportunity too.

Sales in the back half so that means category growth would be on the higher end of our estimates one points on average for U S. Within Ohio second we would have a great execution on innovation and demand creation plan and then third of course.

And assuming no supply or extraneous issues coming up as we continue through the year. So that's.

To continue the stabilization thanks.

Olivia.

Category growth, we've been talking for a while about the stress to the consumers on under and have been calling mitigate unit category growth rates for quite a while and basically what we have seen which we've estimated here to what it's been in that range for a number of quarters.

That's why we need to be true.

Okay. Thank you I'll pass it on.

Yeah.

We'll move next to Olivia Tong with Raymond James.

Great. Thanks.

Hey.

First you mentioned in your prepared remarks, your category growth rates have stabilized even if they were lower than historical.

Now it's been on the higher end of that range and then it's been on the lower end and if you look at this quarter. It was on the lower end if you exclude beauty, which we don't have a very big business and we obviously compete in <unk>, but that's relatively small.

What are you seeing that underlies your confidence in that stabilization because many of your peers seem concerned that things.

Could get worse through basically first half of calendar 'twenty six and I think you mentioned flat to plus one category growth at the moment are you expecting that to get better as time progressing progresses or is it more about your innovation and other actions that are driving that share driving some share opportunity too.

Category growth was about flat now to be fair, we were out of stock in some places and so how much of that is attributed getting to that lower end of the range to us.

Regardless it wasn't the situation that we would have hoped for.

And we could have expected category to be a little bit better than that and maybe more in line with what we had seen in the previous two quarters. So our confidence that that will continue as we are an essential categories. We fuel people's everyday lives they need to clean their house, they need to take care of their pets.

To continue the stabilization thanks.

Olivia.

Have a great growth, we've been talking for a while about the stress to the consumers on under and had been calling mitigate unit category growth rates for quite a while and basically what we have seen which we estimated three to what it's been in that range for a number of quarters.

They need to take out the trash and so that's why we feel theres been a floor on the categories that we compete in keeping them in that range and in addition to that just as you call out Olivia we feel very good about our back half plans and of course, you know our number one focus is reinvigorating category growth and then two our focus is on growing share.

Category growth was about flat now to be fair, we were out of stock in some places and so how much of that is attributed to getting to that lower end of the range to us.

And those categories through better ideas and better execution.

<unk>.

That being said we are watching the consumer carefully because there's a lot of things going on right now many of which are still playing out in our uncertain and that can mean, the consumer would react differently, but again given the dynamics that we know today, what we see as the most likely scenario and how consumers have been responding over the last number of quarters, we feel pretty good about that category estimate of zero to one.

Regardless it wasn't the situation that we would have hoped for and we could have expected category to be a little bit better than that and maybe more in line with what we had seen in the previous two quarters, so our confidence.

Since that that will continue as we are an essential categories.

We fuel people's everyday lives they need to clean their house, they need to take care of their pets.

Got it thanks, and then just on the ERP.

Could you just talk about how the organization is adjusting to all these changes.

Do you expect any disruption to extend beyond Q2 other than obviously the comp issues in Q4, but you've got to deal with but just thinking about the organization and what's the next step after this and.

And.

And those categories through better ideas and better execution. So.

Whether you're expecting any any big pull forward the push backs et cetera.

For the remainder of the year. Thanks.

That being said we are watching the consumer carefully because there's a lot of things going on right now.

Perfect, Yes on the ERP, where through the hard part is the way that I would put it.

Many of which are still playing out in our uncertain and that can mean, the consumer would react differently, but again given the dynamics that we know today.

We did the heavy lifting in Q1, and we had one additional implementation that happened later in the quarter that went without a note we have another smaller implementation happening coming up here and again, we would expect based on what we've seen that that would be of no consequence, either.

What we see as the most likely scenario and how consumers have been responding over the last number of quarters, we feel pretty good about that category estimate of zero to one.

Got it thanks, and then just on the ERP.

And so now the entire company is focused on using that new ERP to drive value and then getting laser focused on reinvestment.

Could you just talk about how the organization is adjusting to all these changes.

Do you expect any disruption to extend beyond Q2 other than obviously the comp issues in Q4 and that but you've got to deal with but just thinking about the organization and what's the next step after this and.

Integrating category growth and executing the plans that we have for Q2 and beyond.

I think generally we're all really excited we've been waiting for this moment for a long time. This unlocks so many things for us to be able to do when it comes to creating superior value for consumers faster insights faster ability to react when consumers have changing behaviors the ability to see end to end in our supply chain, which will just make us better.

And.

Whether you're expecting any any big pull forward the push backs et cetera.

For the remainder of the year.

Perfect, Yes on the ERP, where through the hard part is the way that I would put it.

<unk> at reacting to and what's going on from retailers and consumers and of course on the savings side. There's a lot to be had here from an efficiency perspective that ability to see end to end allows us to remain take cost out it fuels our ability to do net revenue management and all the tools that we've talked about over the over the last couple of years. So generally the organization very <unk>.

And so now the entire company is focused on using that new ERP to drive value and then getting laser focused on reinvestment.

Optimistic and laser focused on now that we've gotten through this period. It is time to put that to work.

Integrating category growth and executing the plans that we have for Q2 and beyond.

And time to ensure that we are reinventing reinvigorating categories, and giving consumers the very best value, we can add a moment they need it more than ever.

Alright, thank you.

And our next question will come from Robert Moskow with TD Cowen.

Yeah.

I just wanted to just confirm.

Given the.

Reacting to and what's going on from retailers and consumers and of course on the savings side. There's a lot to be had here from an efficiency perspective that ability to see end to end allows us to remain take cost out it fuels our ability to do net revenue management and all the tools that we've talked about over the over the last couple of years. So generally the organization's very optimistic.

The issues related to ERP and first quarter are your customer fill rates now back to normal.

Or are you still like a little bit below normal in your second quarter.

And then secondly, I had a question on price mix.

With three straight quarters, now with price mix negative and a lot of commentary on the call about.

Nick and laser focused on now that we've gotten through this period. It is time to put that to work.

Competitive pressures value seeking behavior.

And time to ensure that we are reinventing reinvigorating categories, and giving consumers the very best value, we can at a moment they need it more than ever.

Across many categories at once so.

Is there a path for price mix to inflect positively.

Or is this going to be kind of like a <unk>.

Got it thank you.

Negative environment, although albeit modest.

And our next question will come from Robert Moskow with TD tailwind.

While while working through this value seeking environment.

Okay.

Thanks, Robert I'll take the first one and then I'll pass it over to Luke for price mix.

I just wanted to just confirm.

The.

So on.

Q2 order fulfillment, we are back with retailers unable to fill the orders that they need and we have largely rebuilt inventories nearly everywhere on the margins. There are some small things that we're continuing to work out professional is a good example of that where just given the distribution network. It is taking us a little bit longer than the average to fully rebuild <unk>.

The issues related to ERP and first quarter are your customer fill rates now back to normal.

Or are you still like a little bit below normal in your second quarter.

And then secondly, I had a question on price mix.

Three straight quarters, now with price mix negative and a lot of commentary on the call about.

Inventories, but yes with a cut from a customer perspective, they are experiencing more of a normal clocks and we're able to get back to the type of fill rates.

Competitive pressures value seeking behavior.

Across many categories at once so is.

Is there a path for price mix to inflect positively.

That they expect from us.

Okay.

And on price mix.

Or is this going to be kind of like.

Robert you are right.

Negative environment, although albeit modest.

Last year, we actually saw about two points of price mix and negative price mix and this was really a lot of it was really driven by.

While while working through this value seeking environment.

The value value seeking behaviors from consumers in China, and shifting as well altogether, along with some incremental promotions.

Thanks, Robert I'll take the first one and then I'll pass it over to Luke for price mix.

So on.

Both normalized promotion and increased competitive activity.

This year outlook contemplate still headwind, but lesser about a point and really essentially it's the continuation of value seeking behavior and channel shifting.

There just given the distribution network it is taking us a little bit longer than the average to fully rebuild inventories, but yes with a cut from a customer perspective, they are experiencing more of a normal clocks and we're able to get back to the type of fill rates.

Promotions, Alex fairly stable year over year, and then we.

Actually seeing some.

Benefits from some of the net revenue management activities that were taking place, but not fully offsetting the headwinds of the value seeking JV.

Shifting.

That they expect from us.

Now it would be about one point for the year already was about a point for the first quarter it might it might move quarter by quarters, but I think we're seeing good momentum and then we'll have to see where we add after after next year.

Okay.

And on price mix.

Robert you're right.

Last year, we actually saw about two points of price mix and negative price mix and this was really a lot of it was really driven by.

Thank you.

The value value seeking behaviors for consumers in China, and shifting as well altogether, along with some incremental promotions as we both normalized promotion and increased competitive activity.

And our next question will come from Kevin Grundy with BNP Paribas.

Yeah.

Great. Thanks, good evening everyone.

This year outlook contemplate still headwind, but lesser about a point and really essentially it's the continuation of value seeking behavior and channel shifting.

Question, probably for Luke good Linda like to get your thoughts as well. So it's kind of twofold number one on run rate EPS, how we should still be thinking about that sort of relative to adequacy of investment levels. So look I think you said before we should be thinking about adding back the entirety of the ERP.

Promotions, Alex fairly stable year over year, and then we.

Actually seeing some.

Benefits from some of the net revenue management activities that were taking place, but not fully offsetting the headwinds of the value seeking JV.

Transition EPS now seems like it's going to be the low end of the range of 595 number and then we just sort of gross that up for the ERP transition as we're thinking about sort of run rate going forward.

Shifting.

Now it would be about a point for the January was about a point for the first quarter it might it might move quarter by quarters, but I think we're seeing good momentum and then we'll have to see where we add after after next year.

I want to kind of take your temperature on whether you still feel comfortable with that thinking and I ask in the context that market share is not where you'd like it to be a promo.

Thank you.

And our next question will come from Kevin Grundy with BNP Paribas.

Promo was ramping it seems like the cost of business is moving higher a lot of categories are slower so.

Okay.

Great. Thanks, good evening everyone.

Do you still feel comfortable with that sort of thinking and I guess my question really gets to.

A question probably for Luke, but Linda I'd like to get your thoughts as well. So it's kind of twofold number one on run rate EPS, how we should still be thinking about that sort of relative to adequacy of investment levels. So look I think you said before we should be thinking about adding back the entirety of the ERP.

As youre thinking about the investment factors that may potentially hold back that kind of thinking for investors and that is that the entirety of the 90 should be thought about.

Base earnings or is there a potential here that investment levels need to move higher in the current environment. So love to get your thoughts around that thank you very much.

Sure Kevin I'll start.

You know the way that we look at this the year outside of the fact that we had a blip in the implementation on order fulfillment is largely playing out as we expected.

I wanted to kind of take your temperature on whether you still feel comfortable with that thinking and I ask in the context that market share is not where you'd like it to be a promo.

We're seeing in the consumer largely in line with what we expected categories largely inline competitive activity largely in line.

Promo was ramping it seems like the cost of business is moving higher a lot of categories are slower so.

Our execution largely in line, we are seeing some nuances by category, which is typical in a portfolio like ours, where we play in so many different categories, but I would say the environment. The competitiveness the consumer generally what we thought it would be.

Do you still feel comfortable with that sort of thinking and I guess my question really gets to.

As you are thinking about the investment factors that may potentially hold back that kind of thinking for investors and that is that the entirety of the 90 <unk> should be thought about.

So nothing has changed and our confidence in our ability to navigate that environment.

To deliver the performance that we expect of ourselves and then of course as we come out of this.

Base earnings or is there a potential here that investment levels need to move higher in the current environment. So love to get your thoughts around that thank you very much.

To accelerate all of the things that we know will add value like innovation, continuing to invest sharply and deeply in our brands, which we are this year.

Sure Kevin I'll start.

You know the way that we look at this.

Year outside of the fact that we had a blip in the implementation on order fulfillment is largely playing out as we expected.

Feel like we have the right investment level given everything all the factors that we spoke about.

So generally we see the world very much like we saw the world. The last time, we talked about this and the changes that we from a quarter perspective, we chewed up our outlook to account for the fact that we have.

We're seeing in the consumer largely in line with what we expected categories largely inline competitive activity largely in line.

Had a blip in our implementation, but largely all the other stuff remains true.

What we're watching really carefully Kevin is when will when can we and others reinvigorate category growth and that's what we aim to do in the back half and can we get our categories growing back to the 2% to 5% range, we're used to seeing.

And so nothing has changed and our confidence in our ability to navigate that environment to.

To deliver the performance that we expect of ourselves and then of course as we come out of this.

Even if they don't and this is a prolonged period, we still see the opportunity for our brands to play a leading role in the categories and deliver good value creation and earnings for our shareholders, albeit even if it's at a lower top line growth number.

To accelerate all of the things that we know will add value like innovation, continuing to invest sharply and deeply in our brands, which we are this year.

But it's too early to call that yet we're focused on 26th and making progress in Q2 and the back half, but I would say nothing has changed in our thinking our confidence in our ability to come out of this year and continue to deliver good earnings performance for our shareholders.

Feel like we have the right investment level given everything all the factors that we spoke about so.

And Kevin on.

On the.

Earnings run rate here.

We had a blip in our implementation, but largely all the other stuff remains true.

Your understanding is correct, we would we would see 90 cents.

<unk> added two whereby we finished these two as a starting point to Nextgen and again as a reminder, we.

Essentially ended up shifting two weeks of sales out of fiscal year 2006 into fiscal 'twenty five so the absolutes.

Absolute sales dollars and and.

And EPS in fiscal 2006 are understated and as you lap that you will see a step up in fiscal 'twenty.

Okay very good. Thank you both good luck.

But it's too early to call that yet and we're focused on 26, and making progress in Q2 and the back half, but I would say nothing has changed in our thinking our confidence in our ability to come out of this year and continue to deliver good earnings performance for our shareholders.

Thank you. Thank you.

And this concludes the question and answer session Misread Ole I would now like to turn the program back to you.

Thanks, John.

As we wrap up today's call I want to emphasize that our team is actively navigating a rapidly changing consumer environment. We recognize that consumers are facing ongoing challenges with spending habits shifting quickly across all income levels.

And Kevin.

On the.

Earnings run rate Youre. Your understanding is correct, we would we would see the <unk> being.

While we anticipated many of these changes new patterns continue to emerge and we are closely monitoring these developments by leveraging more real time insights we are adapting our strategies with agility and focus to meet evolving consumer needs.

Being added to whenever we finished these two as a starting point for next year and again as a reminder, we.

Essentially ended up shifting two weeks of sales out of fiscal year 2006 into fiscal 'twenty five so the absolutes.

Our portfolio of trusted brands with strong consumer value loyalty and stable household penetration will help to reinvigorate category growth enable us to recover market share.

The absolute sales dollars and and.

And EPS in fiscal 2006 are understated and as you lap that you will see a step up in fiscal 'twenty.

Looking ahead to the second half of the year, we have a robust pipeline of innovation supported by significant demand creation investments.

Okay very good. Thank you both good luck.

Thank you. Thank you.

We are laser focused on continuing to deliver an enhanced superior value experiences with our brands for consumers and a time they need it more than ever.

And this concludes the question and answer session Misread Ole I would now like to turn the program back to you.

Thanks, John.

Our strong holistic margin management program enables us to reinvest in our brands balancing immediate actions with a long term perspective to ensure their ongoing health and success.

As we wrap up today's call I want to emphasize that our team is actively navigating a rapidly changing consumer environment.

Recognize that consumers are facing ongoing challenges with spending habits shifting quickly across all income levels.

To support our focus on delivering superior value with speed, our new ERP system gives us real time visibility enhances demand planning and enables faster execution with the majority of the implementation complete our focus is on rebuilding growth momentum.

While we anticipated many of these changes new patterns continue to emerge and we're closely monitoring these developments by leveraging more real time insights we are adapting our strategies with agility and focus to meet evolving consumer needs.

The choices, we're making today are shaping a stronger more resilient clorox setting the stage for sustained growth and stakeholder value in the years ahead. Thank.

Our portfolio of trusted brands with strong consumer value loyalty and stable household penetration will help to reinvigorate category growth enable us to recover market share.

Thank you for your time and questions. We look forward to sharing our continued progress in the quarters to come.

Looking ahead to the second half of the year, we have a robust pipeline of innovation supported by significant demand creation investments.

And this concludes today's conference call. Thank you for attending.

We are laser focused on continuing to deliver an enhanced superior value experiences with our brands for consumers and a time they need it more than ever.

Our strong holistic margin management program enables us to reinvest in our brands balancing immediate actions with a long term perspective to ensure their ongoing health and success.

The choices, we're making today are shaping a stronger more resilient clorox setting the stage for sustained growth and stakeholder value in the years ahead. Thank.

Thank you for your time and questions. We look forward to sharing our continued progress in the quarters to come.

And this concludes today's conference call. Thank you for attending.

The host has ended this call goodbye.

Q1 2026 The Clorox Co Earnings Call

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