CLX changes
Pick any two versions below to diff them.
- About
- Clorox makes removed: household added: household, cleaning and personal care products that people buy every week. Its brands include Clorox bleach and wipes, added: Purell hand sanitizer, Pine-Sol cleaner, Glad trash bags, Brita water filters, Burt's Bees skin care, and Kingsford charcoal. Clorox sells these products added: mostly to large removed: retailers such as Walmart and Target, added: retailers, who then sell them to consumers. removed: Most added: Walmart alone bought 26% of Clorox's products in fiscal 2026. Clorox added: also sells to hospitals, offices and other businesses through its professional unit. More than 80% of its sales come from brands removed: hold added: with the number one or number two share removed: position in their category.
- Thesis
- Clorox removed: just finished a five-year project to replace its old removed: SAP added: ERP computer removed: system. added: system in early 2026. The removed: final switchover caused a swing in retailer removed: orders. Fiscal added: orders, and fiscal 2026 added: organic sales fell added: 8%. Gross margin fell 2.9 points, and removed: margins dropped as a result. added: the switchover caused only about one point of that drop. Investors removed: worry this added: fear that the rest shows lasting removed: damage from private-label competition, not just added: share loss to store brands, higher costs and a removed: one-time glitch. Debt added: stressed consumer. Management guides fiscal 2027 organic sales growth of about 3.5% to 4.5%. More than 3.5 points of that growth come from the added: easy comparison with the weak prior year, so the underlying growth is about flat. Debt for the GOJO added: (Purell) purchase and added: the Glad removed: buyouts also pushed leverage above added: joint-venture buyout raised net debt to about four times removed: earnings. That adds balance-sheet risk on top added: EBITDA, a common measure of added: operating profit, by our calculation. S&P cut the removed: sales drop. A credit removed: downgrade added: rating in February 2026, and removed: an open CEO search add further uncertainty. added: the board has not yet named a new CEO. For the gap to close, removed: fiscal 2027 added: three conditions must be true. Organic sales removed: growth needs to reach the 3.5% to 4.5% range added: must grow as guided, after a first-quarter decline that management removed: has guided. Leverage also needs to added: already expects. Net debt must fall removed: back toward management's target of about 2.5 times removed: EBITDA, a common measure of operating profit, added: EBITDA by the end of calendar 2027. removed: A added: The board must name a permanent CEO removed: also needs to be named and show the turnaround is working. added: with a clear plan. The removed: next added: first test removed: comes at added: is the first-quarter fiscal 2027 removed: earnings, added: report, expected removed: around added: in early November removed: 2026. If sales stabilize added: 2026, where the full-year outlook must hold. The second-quarter and removed: leverage falls as planned, added: third-quarter reports in 2027 then show whether gross margin and GOJO profit recover. If these hold, the gap removed: could added: can close over the next four to six quarters. If added: sales disappoint again or the CEO search removed: drags on or sales disappoint again, added: continues for a long time, the discount removed: could persist well added: can stay into removed: 2027. added: 2028.
- Risks
- Debt removed: taken on for the GOJO added: purchase and added: the Glad joint-venture removed: buyouts pushed added: buyout raised net debt to added: $4.93 billion at June 30, 2026. That is about 4.2 times fiscal 2026 EBITDA, removed: above the 3.6 added: by our calculation, or about 3.9 times added: on adjusted EBITDA. Clorox expected added: about 3.6 times when added: it signed the GOJO removed: deal was signed, because added: deal, but EBITDA removed: itself has fallen. added: fell. S&P removed: has already cut removed: Clorox's added: the credit rating once. Management's plan to removed: return to added: reach about 2.5 times removed: leverage by the end of calendar 2027 removed: depends on added: needs earnings removed: actually recovering. added: to recover. CEO Linda Rendle removed: announced in May 2026 that she will step down for health reasons removed: once added: when the board removed: finds added: names a removed: successor. This leadership transition added: successor, and the board has named none yet. Clorox named a Chief Operating Officer in June 2026. The change of leader adds removed: execution risk removed: at the same time added: while Clorox removed: is integrating added: integrates GOJO and removed: stabilizing its new SAP system. Private-label pressure added: repairs sales after the ERP switchover. Management expects input cost inflation of more than $200 million in fiscal 2027 and says that consumers are under stress. Without the easy comparison with fiscal 2026, organic sales growth is removed: not spread evenly across Clorox's business. The added: about flat in the guidance. A weaker consumer or more trade-down to store brands can push sales and margin below the outlook. Store-brand pressure hurts the Household removed: segment, which added: segment most. This segment includes trash bags and cat removed: litter, earns added: litter. In fiscal 2026 it earned only a 10.7% margin and 16% of segment removed: profit despite being added: profit, but it is Clorox's second-largest segment by sales. removed: Further private-label gains here would hurt profit more than in added: Walmart bought 26% of Clorox's removed: stronger categories. added: products in fiscal 2026. A removed: California judge let most of added: change in Walmart's orders, shelf space or store-brand plans has a large effect on Clorox's added: sales. The lawsuit for about $380 million removed: lawsuit against Cognizant removed: proceed in March 2026, added: continues, but no trial date removed: has been set. This is removed: realistic multi-year litigation, not a near-term payout, and Clorox has recovered only a fraction of its claimed damages from insurance added: public. A payment, if any, is probably years away, so removed: far. The options market already prices unusually high volatility into Clorox shares, well above a typical staples stock. This reflects real uncertainty about leverage, the removed: open CEO search, and whether added: suit does not help the removed: FY2027 rebound holds up, with the next test being Clorox's Q1 fiscal 2027 earnings report, expected added: debt plan in removed: early November 2026. added: the near term.
- Balance sheet
- Cash: $143M Debt: $5.1B Net debt: $4.9B EBITDA, last 12 months: $1.2B Net debt / EBITDA: 4.2× (high) Interest cover: 7.0× Undrawn credit line: $2.0B Ratings: S&P BBB, Moody's Baa1 Clorox borrowed to buy GOJO for about $2.15 billion in April 2026, and the debt now limits its choices. removed: Dividends of $602 million were larger than fiscal added: Fiscal 2026 free cash flow removed: of added: was $405 million removed: before added: after the one-time $476 million Glad removed: payment. added: payment, and $881 million before it. Dividends of $602 million were larger than the first figure. Most of its debt is unsecured debt of the parent company. Debt does not include $530 million of lease liabilities. At June 30, 2026, $3.98 billion was fixed-rate added: long-term debt, mostly senior removed: notes, including added: notes. This includes $1.5 billion of new notes from May 2026, due 2031 to removed: 2036. added: 2036, which repaid the term loan for GOJO. $1.09 billion was removed: commercial paper added: short-term borrowings at floating removed: rates. added: rates, mostly commercial paper. Clorox does not publish EBITDA. The EBITDA added: figure is removed: for added: our calculation: fiscal removed: 2026, added: 2026 EBIT of $913 million plus depreciation and removed: interest added: amortization of $247 million. Interest cover uses added: the same EBIT added: and interest expense of removed: $921 added: $130 million. GOJO added profit for only one quarter. Interest cost will rise in fiscal 2027, because the new debt is outstanding for the full year. Long-term debt maturities are small until $901 million in fiscal 2028. $764 million of the undrawn credit lines expires on March 5, removed: 2027. added: 2027, and $1.2 billion matures in March 2030. S&P cut its long-term rating from BBB+ in February 2026. A cut below investment grade would let derivative counterparties ask for full collateral. Equity that Clorox shareholders own was only $90 million because of years of buybacks. This is not a solvency problem by itself. The cash must go to the dividend and to debt reduction toward the 2.5 times target by the end of calendar 2027. This leaves little room for buybacks or another deal. As of Jun 30, 2026.
- Checkpoints
- Nov 2, 2026 (estimate): Fiscal Q1 2027 earnings: removed: sales rebound and leverage. added: full-year outlook holds. Pending. Watch: removed: Organic added: A first-quarter sales removed: growth on track for the 3.5% to 4.5% added: decline no larger than management warned, an unchanged fiscal 2027 removed: range added: outlook and lower net debt pass; removed: another added: a cut to the sales removed: decline or removed: higher leverage added: earnings outlook fails. Feb 2027 (estimate): Fiscal Q2 2027 earnings: margin repair and GOJO. Pending. Watch: Gross margin growth and GOJO profit in line with plan pass; a guidance cut or a new credit downgrade fails. Q1 2027 (estimate): Board names a permanent CEO. Pending. Watch: A named successor with a clear plan for GOJO and debt reduction passes; a search that continues past fiscal Q3 2027 fails. Dec 2027 (estimate): Leverage back near 2.5 times EBITDA. Pending. Watch: Net leverage near 2.5 times by the end of calendar 2027 passes; leverage still above 3.5 times fails.
- Recent events
- Sep added: 28, 2026: Clorox combined its CloroxPro business and GOJO into one professional unit, Clorox Purell ProCare, which sells to hospitals, schools, offices and other businesses. Sep 9, 2026: At the removed: Boston added: Barclays Global added: Consumer Staples Conference, Clorox removed: management said it expects added: kept its fiscal 2027 added: outlook. Management said that first-quarter organic sales removed: growth added: will fall because of removed: 3.5% to 4.5%, matching earlier guidance, and described the removed: year as one added: timing of removed: transition added: retailer promotions, that input cost inflation will be more than $200 million, and removed: repair after finishing added: that gross margin can fall a little more than the removed: SAP system upgrade. added: outlook shows. Aug 3, 2026: Clorox reported removed: full fiscal-year added: fiscal 2026 results. Net sales fell 5% to $6.72 billion, organic sales fell 8%, and adjusted earnings per share fell 28% to $5.53. removed: The company added: For fiscal 2027, Clorox guided added: net sales growth of 13% to removed: 3-4.5% added: 14% with GOJO, organic sales growth removed: for fiscal 2027. added: of about 3.5% to 4.5%, gross margin of about 42%, and adjusted earnings per share of $5.70 to $6.00. Jul 31, 2026: Clorox increased its quarterly dividend to $1.25 per share from $1.24. Jun 17, 2026: Clorox named Chris Hyder Executive Vice President and Chief Operating Officer, and Nina Barton Executive Vice President and Chief Growth and Strategy Officer. May 28, 2026: CEO Linda Rendle asked the board to start a search for her removed: successor, saying she will step down for health reasons after added: successor. She is free of cancer, but the side effects of treatment removed: for early-stage added: that prevents a return of breast removed: cancer. added: cancer caused her decision. She removed: will remain added: stays Chair and CEO until added: the board names a removed: successor is named. added: successor. Apr 1, 2026: Clorox completed its removed: $2.25 billion acquisition added: purchase of GOJO Industries, added: the maker of removed: Purell, funded mostly added: Purell. The announced price was $2.25 billion, or $1.92 billion after expected tax benefits. Clorox paid about $2.15 billion in cash at closing, with added: commercial paper and a new removed: debt. added: term loan. Mar 25, 2026: A California judge removed: trimmed added: dismissed the intentional misrepresentation claim in Clorox's lawsuit against Cognizant, removed: dismissing an intentional misrepresentation claim but removed: letting the breach added: kept most of removed: contract and gross negligence claims proceed. added: the lawsuit. No trial date removed: has been set. added: is public. Mar 2, 2026: Clorox paid $476 million in cash removed: to buy added: for the 20% interest that Procter & removed: Gamble's 20% stake added: Gamble held in the Glad removed: trash bag added: bags and wraps joint removed: venture, taking full ownership of added: venture. The joint-venture agreement ended on January 31, 2026, and the removed: Glad brand. added: agreement required Clorox to buy this interest at fair value. Feb 18, 2026: added: In February 2026, S&P Global Ratings removed: downgraded Clorox added: cut Clorox's long-term credit rating to BBB from removed: BBB+, citing the leverage added by the debt-funded added: BBB+. The cut came after Clorox agreed in January 2026 to buy GOJO removed: acquisition. added: with new debt. Jul 22, 2025: Clorox sued its IT services contractor, Cognizant, for added: about $380 million in removed: California state court, alleging added: the Superior Court of Alameda County, California. Clorox says that during the August 2023 cyberattack, Cognizant's removed: help added: service desk removed: handed network added: reset passwords removed: to added: and multi-factor login for a caller removed: posing as added: who claimed to be an removed: employee during the August 2023 cyberattack. added: employee.