Snapshot
Clorox Co /De/ reported $1.99B of revenue in Q4 2025, up 4.5% year over year, with diluted EPS of $2.68 and an operating margin of 21.4%.
- Revenue
- $1.99B
- YoY growth
- +4.5%
- Diluted EPS
- $2.68
- Operating margin
- 21.4%
What management said
- •Please note also that our earnings release and prepared remarks are available on our website at thecloroxcompany.com.
- •During this call, we may make forward-looking statements, including about our fiscal year 2026 outlook.
- •Our Q4 and fiscal year 2025 performance was mixed, with weaker than expected top-line growth balanced by strong margin and earnings performance for the year.
- •We also lapped abnormally high demand creation activities from last Q4 as we continue to rebuild shares following supply restoration from our August 2023 cyberattack.
- •In this environment, we see opportunity ahead as consumers continue to seek better experiences and we will lean into this with our innovation pipeline in the back half of the year.
- •A bit weaker than what we can see in the data, and kind of a bit below what you contemplated in the guidance a few months back.
- •If you look at our organic sales growth, it was about 8%, and if you back out the 13%-14% related to the retailer inventory build, you get, call it about -5%.
- •Remember at our last earnings, we had estimated that excluding the impact of the ERP, we were expecting to be maybe -3%.
- •The gap is the inventory destocking that we had mentioned in our last earnings, -3% consumption is lower.
- •Although we lost share in Q4, we grew share for the year and we came off of a quarter in Q3 where we maintained share.
- •That will support not only category growth, which we care first and foremost about, but also we believe market share improvements.
- •There is a period of time you can't take orders, and then you have to bring the system back on.
What went well
- •Full fiscal year 2025 delivered strong gross margin and earnings performance even though top-line growth was weaker than expected.
- •The company shipped higher than expected incremental orders to temporarily build retailer inventories ahead of its U.S. ERP launch, with most of the greenfield implementation going exceptionally well during the roughly eight-week transition.
- •The Cleaning business performed exactly as expected, continuing to grow share with innovation plans that worked extremely well.
- •For the full year the company grew Household penetration and grew share, and its consumer value metric remained at a high point in fiscal 2025 at 60% superior, higher than pre-pandemic levels.
- •The wipes business grew strongly, including new Scentiva wipes growing at four times the rate of overall growth, and Scentiva saw 40% growth for the year.
- •Q4 gross margin impact from the ERP build was favorable versus plan because higher shipments drove operating leverage and the company avoided planned external warehousing expenses.
What went wrong
- •Q4 organic sales excluding the ERP retailer inventory build were about -5%, lower than the roughly -3% the company had previously expected, driven by lower-than-anticipated share performance.
- •The company lost share in Q4, did not deliver on all elements of its value superiority plans on some businesses, and lapped abnormally high demand-creation activity from the prior-year Q4 cyberattack recovery.
- •Kingsford execution fell short for Memorial Day amid poor weather, with slightly less merchandising and not on the right sizes after the company shifted its plan.
- •Q4 price mix was about -4%, abnormally high, with roughly -2% of that one-time trade spending accrual adjustment; Household price mix was down six points, hurt by lapping prior-period merchandising.
- •Advertising spend in dollars in Q4 was the lowest level since Q4 2019, reflecting the lap of heavy prior-year post-cyberattack spending.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Organic sales growth (reported FY2026) | FY2026 | — | 7%-8% (including ERP cycling) | — |
| Organic sales growth (ex-ERP) | FY2026 | — | -1% to +2% | — |
| Gross margin (ex-ERP) | FY2026 | — | flat to +50 bps | — |
| Adjusted EPS growth (reported) | FY2026 | — | 22%-25% | — |
| Adjusted EPS growth (ex-ERP) | FY2026 | — | 2%-4% | — |
| Tariff cost headwind | FY2026 | — | about $40 million | — |
| Supply chain / commodity inflation headwind | FY2026 | — | $80 million-$90 million | — |
| ERP shipment timing impact on sales | Q1 FY2026 | — | about -14% to -15% | — |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Organic sales growth (reported) | about +8% | Driven by roughly 13%-14% from the retailer inventory build ahead of the ERP launch; underlying ex-ERP was about -5%. |
| Consumption | about -3% | Categories slightly negative plus a lower-than-anticipated share performance. |
| Price mix | about -4% | Included a one-time trade spending accrual adjustment; underlying about -2%. |
| Household price mix | about -6% | Lapping significant merchandising events in the prior period added about two points of drag for the segment. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| ERP transition | Expected one to one-and-a-half weeks of retailer inventory build (about 2-3 points of annual growth) | Retailers ordered more than committed, shipping about two weeks of inventory worth 3.5-4 points; now in stabilization/ramp-up phase | intensifying |
| Consumer environment | Stabilized in Q4 but not yet normalized | Consumers under stress, uncertain, value-seeking, trading to smaller sizes and different retailers | pressured |
| Promotional environment | — | Largely rational in aggregate, with deep discounting pockets in trash and Cat litter expected to continue into FY2026 | stable with pockets of intensity |
| Back-half innovation | Built on existing platforms in FY2025 due to cyberattack | Launching new innovation platforms in the back half of FY2026 to drive category and share | ramping |
| Glad JV with P&G | Paying P&G about 20% of cash flow quarterly through COGS | Exiting the agreement in January, repurchasing P&G's 20% interest, worth about 50 bps of gross margin (20-25 bps in FY2026) | improving margin |
Q&A summary
Why was organic performance, excluding the ERP benefit, weaker than the consumption data and below prior guidance? (UBS)
Ex-ERP organic was about -5% versus the roughly -3% previously expected; the gap to the -3% consumption was inventory destocking, and consumption fell short of the slightly negative category due to lower share performance.
How big is the ERP impact on the FY2026 outlook and how does it phase? (JPMorgan)
Two weeks of inventory worth 3.5-4 points lifted FY2025 sales and depress FY2026 sales by the same; Q1 sales are down about -14% to -15% and Q4 also gets hit by lapping; in aggregate FY2026 is reported as 7-8 points of organic sales, 100 bps margin and 22-25% adjusted EPS growth, and ex-ERP -1% to +2% organic, flat to +50 bps margin, 2-4% EPS.
What category growth and promotional environment are embedded in the ex-ERP -1% to +2% guidance? (Citi)
The midpoint assumes U.S. category stabilized but not normalized, growing about 0%-1%; price mix about -1%; front half negative low single digits and back half positive low single digits; promotions largely rational with deeper discounting pockets in trash and Cat litter.
What is the expected tariff impact for FY2026? (Citi)
About $40 million of higher cost based on tariffs announced to date and assuming USMCA exemptions, to be offset through sourcing changes, reformulations, productivity and modest targeted strategic pricing.
What drove negative price mix in the quarter and in Household specifically? (Evercore ISI)
Q4 price mix was about -4%, including a one-time end-of-year trade spending accrual adjustment; excluding it, price mix would have been about -2%; Household down six was driven by lapping significant prior-period merchandising, adding about two points for the segment.
Can we think of normalized EPS exiting the year at around $7 by adding back about $0.90 for the ERP shift? (Deutsche Bank)
Yes, that is exactly right and the simplest approach, taking the midpoint of headline EPS guidance and adding back about $0.90, subject to a range given ERP noise and environmental uncertainty.