Snapshot
Clorox Co /De/ reported $1.67B of revenue in Q3 2026, up 0.1% year over year, with diluted EPS of $1.54 and an operating margin of 17.3%.
- Revenue
- $1.67B
- YoY growth
- +0.1%
- Diluted EPS
- $1.54
- Operating margin
- 17.3%
What management said
- •Please note 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 2026 outlook.
- •Gross margin also came in below expectations, driven by higher than expected supply chain costs and delayed cost savings as we deliberately prioritized stabilizing the ERP.
- •Food, we returned to share growth this quarter, so lots of things going well, and where momentum continues.
- •I guess I know we'll get 2027 guidance in August, but there's just a lot of moving pieces here with the $0.90 GLP-1s and now this inflationary pressure.
- •This is obviously material, because it's in Q4, we didn't have, you know, time yet to deploy any of the mitigation actions.
- •We have a steady track record over the last few years, if anything, we've developed a really robust set of tools around integrated margin management.
- •As you probably saw in Q4, we are recognizing a large one-time cost, and this is in our gross margin.
- •That's a headwind of 50 basis points, but that's going to allow us to actually accelerate one of those more structural cost savings.
- •Of course, it will differ by BUs, depending on the competitive dynamic, as well as the pipeline that was already existing.
- •Did that change as you point now to, like, you know, the impact that I think, if I understood it correctly, Luc, you mentioned 30 basis points gross margin headwind.
- •How does that change for GOJO's when you gave guidance at the time wasn't when, you know, we saw oil prices at these levels?
What went well
- •The ERP implementation is now complete across all three rounds, service levels have stabilized, and complexity and costs are coming down, giving the company a stronger operating foundation.
- •The cleaning business, the company's largest, continues to be an area of strength, winning and gaining share despite a competitive promotional environment, with the Clorox PURE allergen platform tracking above expectations on velocity and Scentiva's new Cherry Blossom becoming the number one scent.
- •International continues to perform with strength despite global disruptions, and Glad made significant progress with sequentially improving share, picking-up distribution, and price investments performing well.
- •Food returned to share growth in the quarter behind reversing the Hidden Valley bottle change and launching trend-forward items including protein-forward options and an avocado oil dressing.
- •Total Distribution Points were up over 5% in Q3, in line with the shelf-space plan, and most categories were positive in the quarter with private label shares not increasing.
- •The GOJO acquisition closed April 1, adding an $800 million business growing mid-single digits, EBITDA-neutral in year one with at least $50 million of run-rate cost synergies expected over time.
What went wrong
- •Q3 results were mixed and fell short of expectations, with market share progress more gradual than anticipated in certain categories and the pace of improvement slower than expected in some businesses.
- •Gross margin came in below expectations, driven by higher-than-expected supply chain costs and delayed cost savings as the company prioritized stabilizing the ERP.
- •The litter relaunch is making slower, bumpier progress than expected, with shelf placement issues, hard-conversion out-of-stocks, and weak velocities despite distribution gains.
- •The food category was weaker than expected, declining closer to mid-single digits versus an expected low-single-digit decline, amid high promotional intensity, deep competitor discounting, and GLP-1 watch points.
- •A new oil-price headwind from the Middle East conflict is hitting Q4 gross margin by about 130 basis points (about $20-$25 million at roughly $100 per barrel) with no time yet to deploy mitigations.
Guidance changes
| Metric | Period | Previous | Current | Change |
|---|---|---|---|---|
| Full-year gross margin | FY2026 | down about 100 bps | down 250-300 bps | worse by about 150-200 bps |
| Oil price assumption (Q4 midpoint) | Q4 FY2026 | — | about $100 per barrel (about $20-$25 million / 130 bps headwind) | — |
| Category growth assumption | FY2026 | 0%-1% | 0%-1% | unchanged |
| GOJO contribution to sales | Q4 FY2026 | — | about $200 million (about +10% in Q4, +3% full year) | — |
| GOJO gross margin dilution | Year 1 | — | about 50 bps ongoing (plus 150 bps one-time inventory step-up in Q4) | — |
| Incremental interest expense from GOJO | Q4 FY2026 | about $100 million run rate | about +$30 million in Q4 (about +$110 million next year) | — |
| One-time cost-saving acceleration charge | Q4 FY2026 | — | about 50 bps gross margin headwind | — |
Performance breakdown
| Metric | YoY change | Reason |
|---|---|---|
| Total company U.S. Retail shipment vs consumption | about -1 point of negative timing | Health and wellness reversal from a Q2 prebuild offset against household early shipments and lifestyle retailer inventory adjustments. |
| Total Distribution Points | up over 5% | Shelf-space gains across the portfolio in line with plan, though some items not yet in the right shelf locations. |
| Food category | closer to mid-single-digit decline | High promotional intensity and deep competitor discounting plus GLP-1 consumer trends; company still grew share. |
| Trash category | up over 2 points | Strong category with Glad share sequentially improving on sharper price points and better innovation. |
Earnings call themes & trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| ERP transition | Stabilizing after completing the January manufacturing phase | Implementation complete across all three rounds; service levels stabilized late in Q3 with minimal incremental cost expected in Q4, moving into the optimization phase | completing |
| Input cost inflation | Moderate inflation expected, manageable over time | New Middle East oil-price headwind hitting Q4 by about 130 bps; too early to size FY2027 | intensifying |
| Litter relaunch | Full multi-year relaunch beginning with encouraging early results | Bumpier and slower than expected with shelf placement gaps and hard-conversion out-of-stocks; a multi-year effort still being fixed | behind plan |
| GOJO/Purell acquisition | Planned acquisition announced | Closed April 1; integration underway, management retained, $800 million business, EBITDA-neutral year one, at least $50 million run-rate synergies over time | integrating |
| Net revenue management / pricing | Selective disciplined price investments such as Glad | RGM live in market (Glad price-down grew share); evaluating targeted FY2027 pricing with discipline given a stressed consumer | expanding |
Q&A summary
Why is the improvement not taking shape as hoped, and do you have confidence in stronger FY2027 performance? (UBS)
Cleaning, International, Glad and food (which returned to share growth) are performing at or above expectations; the shortfall is concentrated in litter (slower, bumpier relaunch) and food (category weaker than expected at mid-single-digit decline), with continued progress expected in Q4 and into FY2027.
How should we frame the cost and inflation outlook into FY2027? (UBS)
Too early to size FY2027; Q4 reflects about $20-$25 million (130 bps) from higher oil at about $100 per barrel with no mitigations yet deployed, but the company is confident in covering input cost increases over time through its integrated margin management toolkit.
Are shelf-space gains tracking to plan? (Citi)
Yes at the aggregate level, with Q3 Total Distribution Points up over 5% and resets continuing through Q4; the focus now is ensuring items are in the right locations, with litter a notable case where distribution came in but shelf placement on some items needs fixing.
How did shipment compare to consumption in the quarter? (Wells Fargo)
Total company U.S. Retail netted to about 1 point of negative timing; a Q2 health and wellness prebuild reversed in Q3 as expected, while household early shipments (litter and Kingsford) and lifestyle retailer inventory adjustments roughly offset, with the household early shipments set to reverse a bit in Q4.
What changed in the full-year gross margin outlook from down about 100 bps to down 250-300 bps? (Deutsche Bank)
About a point came from the Q3 shortfall (supply chain costs and delayed savings), with Q4 adding new GOJO dilution (200 bps including a 150 bps one-time inventory step-up), about 100-250 bps of elevated Middle East input cost, and about 50 bps from a one-time charge to accelerate a structural cost-saving project into FY2027.
Does industry-wide oil inflation make it easier to take pricing or pull back promotion? (TD Cowen)
Rising inflation is shared across the industry, making conversations more productive, but the company is approaching potential targeted pricing with high discipline and caution given a stressed consumer, prioritizing value superiority and using RGM and trade optimization alongside any pricing.