Clorox (NYSE:CLX) executives said third-quarter fiscal 2026 results were “mixed” and fell short of internal expectations as the company worked through higher supply chain costs, delayed cost savings, and a slower-than-anticipated recovery in a few businesses following its ERP rollout.
Chair and CEO Linda Rendle told investors the company entered fiscal 2026 with a “disciplined, phased approach,” prioritizing implementation and stabilization of a new ERP system in the first half, then shifting focus to “rebuilding momentum, getting innovation to shelf, and sharpening execution” in the back half. While management said that sequencing remains correct, Rendle acknowledged the pace of improvement has been slower than planned in some areas.
ERP rollout completed; margin pressure tied to supply chain costs and delayed savings
CFO Luc Bellet provided additional detail, saying incremental ERP-related costs were primarily tied to logistics and fulfillment, including “cost of expediting orders,” “less than optimal transportation costs,” and “incremental labor costs.” Bellet said those costs were higher than anticipated in Q3, but diminished late in the quarter. “For the Q4, we would expect no incremental cost or very minimal,” he said.
Bellet also said some cost savings were delayed due to the extended stabilization period. “Some will go in Q4 and some of Q4 will go in next year,” he said, adding that the company already has “a strong pipeline” of savings heading into next year.
Category and portfolio performance: strength in cleaning, international, and Glad; slower progress in litter
Rendle highlighted multiple areas of strength, including the cleaning business—Clorox’s largest segment—where she said innovation is performing “extraordinarily well” and the company continues to gain share despite a competitive promotional environment. She also cited international performance as strong “despite disruptions around the world,” and said Glad has made “significant progress” with sequential share improvements and improved distribution.
Rendle said the biggest shortfall versus expectations was in a few businesses, particularly litter. She described a “complete reinvention” of Fresh Step that included changes to items, names, claims, and price-pack architecture, with rollout beginning at the end of Q3. While distribution gains were largely in line with expectations, she said execution issues remain, including shelf placement challenges at certain retailers. “I think litter is going to be just bumpier,” Rendle said, calling it a “multi-year process.”
Food returned to share growth in Q3, but Rendle said the category itself was weaker than expected—closer to a mid-single-digit decline versus the company’s initial expectation for a low-single-digit decline. She pointed to “high promotional intensity and deep discounting from competitors,” as well as consumer trends the company is monitoring, including “GLP-1s.”
Shelf space and distribution improving; execution focus shifts to placement and activation
In response to questions on shelf-space gains, Rendle said distribution progress is tracking to plan at an aggregate level. Total Distribution Points in Q3 were up “over 5%,” and she said retailers will continue resetting shelves through the remainder of Q4.
However, she emphasized the company is now focused on ensuring items are placed correctly. Using litter as an example, Rendle said the company achieved the expected distribution gains but in some cases products were “shelved in a different place than we had expected” or next to an unexpected item—prompting “detailed shelf work” with retailers.
Bellet also addressed shipment-versus-consumption dynamics, saying timing effects created about “1 point of negative timing related to consumption” in U.S. retail for the total company. He said health and wellness reversed prior-quarter favorability as Clorox shipped ahead of consumption in Q2 ahead of an ERP manufacturing wave, while household and lifestyle experienced additional “noise” tied to retailer inventory adjustments and early shipments that are expected to reverse in Q4.
Cost inflation and mitigation tools: oil at $100 per barrel assumption in Q4
Management discussed rising input costs tied to oil. Bellet said Clorox is assuming about $100 per barrel as the midpoint for Q4, which he estimated as “between $20 million and $25 million of headwinds or about 130 basis points of gross margin.” He noted the impact is more acute in Q4 because the company has not yet deployed mitigation actions and is seeing the “full gross impact.”
Looking ahead, Bellet said it is too early to share a detailed fiscal 2027 view given uncertainty, but said the company is working through scenarios and expects to lean on its “integrated margin management” toolkit, including revenue growth management (RGM), price-pack architecture, productivity and cost savings, supply chain actions, and potential reformulation.
Rendle said Clorox is evaluating “potential targeted pricing,” but stressed caution due to consumer pressure. “Our absolute number 1 priority is to ensure that we are driving improvements in value superiority,” she said, adding that conversations with retailers may be more straightforward because the inflationary pressures are visible across the industry.
GOJO acquisition: integration underway; near-term dilution to gross margin but EBITDA neutral initially
Rendle said Clorox closed its acquisition of GOJO on April 1 and has been working on integration planning since then. She called it strategically attractive because it adds growth exposure in health and hygiene, and said management retained the GOJO leadership team. Rendle also said she remains confident the acquisition will be “accretive to the company in the near term.”
Bellet said GOJO adds an “$800 million” business with a track record of “growing mid-single digits,” contributing roughly “$200 million in Q4,” or about 10% of quarterly sales and 3% for the full year, with the remainder included in fiscal 2027. He said GOJO is expected to be “year 1 EBITDA neutral” with Clorox and that the company remains confident in delivering “at least $50 million of run rate cost synergies” over time, with synergies expected to begin in year two and year three as the first year focuses on integration.
Bellet said the acquisition is expected to be gross margin dilutive by about 50 basis points in year one, and that in Q4 there will be an additional one-time inventory value step-up headwind worth about 150 basis points. He also noted interest expense impacts, including about an incremental $30 million in Q4 and an expectation of about $110 million above the company’s pre-acquisition $100 million run-rate next year.
On advertising, Bellet said the inclusion of GOJO will lower advertising as a percentage of sales due to GOJO’s lower advertising profile, with the full-year guidance rounding to 11% despite the shift.
Rendle closed the call by reiterating that while Q3 did not meet expectations, Clorox believes it is now operating from a stronger foundation post-ERP and sees progress in innovation and on-shelf presence. She said the company’s focus remains on “availability, pricing, and promotional effectiveness, and in-market execution” to build momentum into Q4 and fiscal 2027.
About Clorox (NYSE:CLX)
The Clorox Company is a leading manufacturer and marketer of consumer and professional products designed to help people care for their homes and live healthy, sustainable lives. Its portfolio spans cleaning and household products, food and beverages, water filtration systems and cat litter, serving both retail and institutional customers. The company’s flagship bleach and disinfecting products are well known in the United States and many international markets, where they help prevent the spread of germs in homes, hospitals, schools and businesses.
Clorox’s diverse brand lineup includes liquid bleach and surface cleaners, eco-friendly cleaning tools, food preservation and preparation items, charcoal grills and briquettes, specialty foods and beverages, pet care products and personal care lines.
