- Company name
- The Clorox Company
- Sector
- Consumer staples (household & personal products)
- About
- Clorox makes household, cleaning and personal care products that people buy every week. Its brands include Clorox bleach and wipes, Purell hand sanitizer, Pine-Sol cleaner, Glad trash bags, Brita water filters, Burt's Bees skin care, and Kingsford charcoal. Clorox sells these products mostly to large retailers, who then sell them to consumers. Walmart alone bought 26% of Clorox's products in fiscal 2026. Clorox also sells to hospitals, offices and other businesses through its professional unit. More than 80% of its sales come from brands with the number one or number two share in their category.
- Thesis
- Clorox finished a five-year project to replace its old ERP computer system in early 2026. The switchover caused a swing in retailer orders, and fiscal 2026 organic sales fell 8%. Gross margin fell 2.9 points, and the switchover caused only about one point of that drop. Investors fear that the rest shows lasting share loss to store brands, higher costs and a 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 easy comparison with the weak prior year, so the underlying growth is about flat. Debt for the GOJO (Purell) purchase and the Glad joint-venture buyout raised net debt to about four times EBITDA, a common measure of operating profit, by our calculation. S&P cut the credit rating in February 2026, and the board has not yet named a new CEO. For the gap to close, three conditions must be true. Organic sales must grow as guided, after a first-quarter decline that management already expects. Net debt must fall toward management's target of about 2.5 times EBITDA by the end of calendar 2027. The board must name a permanent CEO with a clear plan. The first test is the first-quarter fiscal 2027 report, expected in early November 2026, where the full-year outlook must hold. The second-quarter and third-quarter reports in 2027 then show whether gross margin and GOJO profit recover. If these hold, the gap can close over the next four to six quarters. If sales disappoint again or the CEO search continues for a long time, the discount can stay into 2028.
- Risks
- Debt for the GOJO purchase and the Glad joint-venture buyout raised net debt to $4.93 billion at June 30, 2026. That is about 4.2 times fiscal 2026 EBITDA, by our calculation, or about 3.9 times on adjusted EBITDA. Clorox expected about 3.6 times when it signed the GOJO deal, but EBITDA fell. S&P already cut the credit rating once. Management's plan to reach about 2.5 times by the end of calendar 2027 needs earnings to recover.
CEO Linda Rendle will step down for health reasons when the board names a successor, and the board has named none yet. Clorox named a Chief Operating Officer in June 2026. The change of leader adds risk while Clorox integrates GOJO and 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 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 segment most. This segment includes trash bags and cat litter. In fiscal 2026 it earned only a 10.7% margin and 16% of segment profit, but it is Clorox's second-largest segment by sales.
Walmart bought 26% of Clorox's products in fiscal 2026. A change in Walmart's orders, shelf space or store-brand plans has a large effect on Clorox's sales.
The lawsuit for about $380 million against Cognizant continues, but no trial date is public. A payment, if any, is probably years away, so the suit does not help the debt plan in 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. Fiscal 2026 free cash flow was $405 million after the one-time $476 million Glad 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 long-term debt, mostly senior notes. This includes $1.5 billion of new notes from May 2026, due 2031 to 2036, which repaid the term loan for GOJO. $1.09 billion was short-term borrowings at floating rates, mostly commercial paper. Clorox does not publish EBITDA. The EBITDA figure is our calculation: fiscal 2026 EBIT of $913 million plus depreciation and amortization of $247 million. Interest cover uses the same EBIT and interest expense of $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, 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 2026-06-30.
- Checkpoints
- Nov 2, 2026 (estimate): Fiscal Q1 2027 earnings: full-year outlook holds. Pending. Watch: A first-quarter sales decline no larger than management warned, an unchanged fiscal 2027 outlook and lower net debt pass; a cut to the sales or 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
- 2026-09-28: Clorox combined its CloroxPro business and GOJO into one professional unit, Clorox Purell ProCare, which sells to hospitals, schools, offices and other businesses.
2026-09-09: At the Barclays Global Consumer Staples Conference, Clorox kept its fiscal 2027 outlook. Management said that first-quarter organic sales will fall because of the timing of retailer promotions, that input cost inflation will be more than $200 million, and that gross margin can fall a little more than the outlook shows.
2026-08-03: Clorox reported 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. For fiscal 2027, Clorox guided net sales growth of 13% to 14% with GOJO, organic sales growth of about 3.5% to 4.5%, gross margin of about 42%, and adjusted earnings per share of $5.70 to $6.00.
2026-07-31: Clorox increased its quarterly dividend to $1.25 per share from $1.24.
2026-06-17: Clorox named Chris Hyder Executive Vice President and Chief Operating Officer, and Nina Barton Executive Vice President and Chief Growth and Strategy Officer.
2026-05-28: CEO Linda Rendle asked the board to start a search for her successor. She is free of cancer, but the side effects of treatment that prevents a return of breast cancer caused her decision. She stays Chair and CEO until the board names a successor.
2026-04-01: Clorox completed its purchase of GOJO Industries, the maker of 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 commercial paper and a new term loan.
2026-03-25: A California judge dismissed the intentional misrepresentation claim in Clorox's lawsuit against Cognizant, but kept most of the lawsuit. No trial date is public.
2026-03-02: Clorox paid $476 million in cash for the 20% interest that Procter & Gamble held in the Glad bags and wraps joint venture. The joint-venture agreement ended on January 31, 2026, and the agreement required Clorox to buy this interest at fair value.
2026-02-18: In February 2026, S&P Global Ratings cut Clorox's long-term credit rating to BBB from BBB+. The cut came after Clorox agreed in January 2026 to buy GOJO with new debt.
2025-07-22: Clorox sued its IT services contractor, Cognizant, for about $380 million in the Superior Court of Alameda County, California. Clorox says that during the August 2023 cyberattack, Cognizant's service desk reset passwords and multi-factor login for a caller who claimed to be an employee.