Snapshot
Clorox Co /De/ reported $1.67B of revenue in Q2 2026, up -0.8% year over year, with diluted EPS of $1.29 and an operating margin of 14.4%.
- Revenue
- $1.67B
- YoY growth
- +-0.8%
- Diluted EPS
- $1.29
- Operating margin
- 14.4%
What management said
- •Please refer to today's earnings release, which identifies various factors that could affect forward-looking statements and provides information that reconciles non-GAAP financial measures to the most directly comparable GAAP measures.
- •And with our planned acquisition of GOJO Industries, we're taking a decisive step to expand our leadership in health and hygiene and unlock long-term growth opportunities.
- •I mean, obviously, you, you did, reaffirm your guidance, how we should be thinking of, the competitive environment now and the promotional environment.
- •And then as we head into the back half of the year, we continue to expect category growth to be in the 0%-1% range.
- •We have excellent innovation plans in the back half, strong demand plans, and we're beginning to see the fruits of that.
- •But I would say the consumer was largely steady as we had expected and in line with category growth.
- •I'll return to the point I made at the beginning on Q2.
- •We think it's well within that band, and again, Q1 and Q2 were about the same category growth rate, about flat.
- •And just for context, if you remember, we went live with the new ERP in July, and that was for most of our operation, including order to cash, demand fulfillment, and logistics.
- •So that's really just quarterly noise and has no implication on the full year.
- •And then from an investment perspective, we have double our typical launch size investment plan behind marketing, behind demand creation, et cetera.
- •We're excited about continuing to offer consumers additional value in the trash segment, and particularly, again, focused on ensuring that we are innovating, and giving people better experiences.
What went well
- •The company saw sequential improvement through Q2, with a stronger exit rate than entry rate, consistent with its expectation for stronger back-half category and company performance.
- •Consumption picked up in January, and the company grew share in the last week of the month, indicating its investments are beginning to work.
- •The final phase of the ERP manufacturing implementation in January went very smoothly, completing the major implementation and putting the heavy lifting behind the company.
- •The company announced the planned acquisition of GOJO Industries (Purell) to expand its leadership in health and hygiene, a business with strong category tailwinds and upside in both B2B and retail.
- •Glad showed sequential improvement during the quarter from strategic, focused promotion, and the back-half innovation pipeline is strong across all major brands, including a new Clorox allergen platform, Glad ForceFlex LeakGuard, a full litter relaunch, and Hidden Valley items.
- •Household penetration on the biggest mega brands such as Clorox is up, and the consumer value metric remains significantly higher than pre-COVID.
What went wrong
- •Share performance was down in the quarter, in line with expectations but not where the company wants it, with category growth about flat (Q2 down a tenth of a point excluding beauty).
- •Household segment had negative pricing, with EBIT margin in the quarter at only about 5.3%, pressured by stepped-up promotions in trash and litter plus higher manufacturing and logistics costs.
- •The company incurred higher-than-anticipated supply chain costs and incremental ERP stabilization expenses, especially in logistics, weighing on front-half gross margin.
- •Cat litter and trash remained more promotionally intense, with the company itself promoting more (including a large Scoop Away promotion at Costco) as it works to rebuild share.
- •Price mix remained a headwind (about a point for the year), driven by consumer value-seeking and channel shifting.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Organic sales growth | FY2026 | reaffirmed | reaffirmed (guidance reaffirmed) | unchanged |
| Category growth assumption | FY2026 back half | 0%-1% | 0%-1% | unchanged |
| Price mix | FY2026 | about -1% | about -1% (headwind) | unchanged |
| Glad JV termination benefit | FY2026 back half | — | about 50 bps of gross margin benefit | — |
| Advertising as percent of sales | FY2026 | 11% (first half 11.5%) | about 11% | unchanged |
| Digital investment EPS adjustment | Q3 FY2026 | — | about $0.08 (last quarter with adjustment) | — |
| Gross margin phasing | FY2026 back half | — | Q3 about flat, solid expansion in Q4 | — |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Category growth | about flat | Q1 flat excluding beauty and Q2 down a tenth of a point; consumer under stress in the 0-1% range, with a January pickup partly weather-driven. |
| Total company price mix | about flat | Net revenue management initiatives partially offset value-seeking behavior and channel shifting; full-year expected about -1%. |
| Household pricing | negative | Volume-driven consumption and share loss plus a shift to larger sizes in bags and wraps and channel shifting created price-mix headwind. |
| Household EBIT margin | about 5.3% | Stepped-up promotions behind trash and litter and higher manufacturing and logistics costs. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| ERP transition | Through the hard part after Q1 | Final manufacturing phase completed in January and went smoothly; remaining year is about stabilizing and then optimizing | completing |
| Back-half innovation | Launches planned across all major brands | Shipping has begun but most shelf resets occur late Q3 or early Q4; Clorox allergen platform, Glad LeakGuard, full litter relaunch, Hidden Valley with new Avocado Ranch | ramping |
| GOJO/Purell acquisition | — | Planned acquisition announced to expand health and hygiene leadership; leaning into a long-standing area of strength | new strategic addition |
| Promotional environment | Back to roughly pre-COVID levels with pockets of intensity | Elevated versus last year but in line with historical rates; trash and litter more promotional, with Scoop Away Costco promotion creating data noise | stable with pockets |
| Litter relaunch | Innovation planned for the back half | Full multi-year relaunch beginning in the back half with new packaging, graphics, claims, items and price pack architecture; early results encouraging | launching |
Q&A summary
How did the quarter exit and how should we think about competitive and promotional trends? (JPMorgan)
Q2 saw sequential improvement with a stronger exit rate, continuing into January (partly weather-driven, with share growth in the last week); category was about flat and roughly in line with Q1; competition was largely as expected and back near pre-COVID levels with pockets in litter and Glad; back-half category growth still expected at 0%-1%.
How big is the shipment favorability that reverses in Q3, and when do innovation benefits show? (UBS)
About a point of favorability from higher shipments ahead of consumption, largely tied to the final January ERP manufacturing phase prebuild, will reverse in Q3; most innovation shelf resets occur late Q3 or early Q4, so a significant share ramp is expected then.
How should we think about price mix and the back-half gross margin drivers? (Citi)
Price mix is expected to be about a 1-point headwind for the year (Q2 about flat) from value-seeking and channel shifting, partially offset by net revenue management; back-half gross margin expands versus a contracting front half on higher cost-savings run rate, falling ERP stabilization costs, and about 50 bps from the Glad JV termination, with Q3 about flat and solid Q4 expansion.
Why is there still a digital/ERP investment adjustment if the ERP is done? (Evercore)
The company is wrapping up the five-year digital transformation investment, with about $0.08 of adjustment in Q3 being the last; ongoing technology investment continues within the P&L, generally offset by productivity savings from automation.
Would you take price investment off the table given the pressured consumer? (BNP Paribas)
No; the company has made selective, disciplined strategic price investments (notably in trash bags and some home care) funded by holistic margin management, and would do more if needed, while noting private label was up only 0.1 share point and consumers still want brands.
What is the risk of distraction or destocking as activity shifts to club and e-commerce? (Raymond James / TD Cowen)
RGM capabilities let the company design the right pack for each retailer at scale; trade-up to larger sizes in club is offset by downward sizing pressure in dollar channels, keeping price mix in a reasonable range; enterprise retail inventory levels are about where expected with no material destocking flagged.