- 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 such as Walmart and Target, who then sell them to consumers. MostWalmart 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 holdwith the number one or number two share position in their category.
- Thesis
- Clorox just finished a five-year project to replace its old SAPERP computer system in early 2026. The final switchover caused a swing in retailer orders. Fiscal, and fiscal 2026 organic sales fell 8%. Gross margin fell 2.9 points, and margins dropped as a resultthe switchover caused only about one point of that drop. Investors worry thisfear that the rest shows lasting damage from private-label competitionshare loss to store brands, not justhigher costs and a one-time glitchstressed consumer. DebtManagement 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 buyouts also pushed leverage abovejoint-venture buyout raised net debt to about four times earnings. That adds balance-sheet risk on topEBITDA, a common measure of the sales dropoperating profit, by our calculation. AS&P cut the credit downgraderating in February 2026, and an openthe board has not yet named a new CEO search add further uncertainty. For the gap to close, fiscal 2027 sales growth needs to reach the 3three conditions must be true.5% to 4.5% range management has Organic sales must grow as guided, after a first-quarter decline that management already expects. Leverage also needs toNet debt must fall back toward management's target of about 2.5 times EBITDA, a common measure of operating profit, by the end of calendar 2027. AThe board must name a permanent CEO also needs to be named and show the turnaround is workingwith a clear plan. The nextfirst test comes atis the first-quarter fiscal 2027 earningsreport, expected aroundin early November 2026, where the full-year outlook must hold. If sales stabilizeThe second-quarter and leverage falls as plannedthird-quarter reports in 2027 then show whether gross margin and GOJO profit recover. If these hold, the gap couldcan close over the next four to six quarters. If the CEO search drags on or sales disappoint again or the CEO search continues for a long time, the discount could persist wellcan stay into 20272028.
- Risks
- Debt taken on for the GOJO purchase and the Glad joint-venture buyouts pushedbuyout raised net debt to $4.93 billion at June 30, 2026. That is about 4.2 times fiscal 2026 EBITDA, above theby our calculation, or about 3.69 times on adjusted EBITDA. Clorox expected about 3.6 times when it signed the GOJO deal was signed, becausebut EBITDA itself has fallenfell. S&P has already cut Clorox'sthe credit rating once. Management's plan to return toreach about 2.5 times leverage by the end of calendar 2027 depends onneeds earnings actually recoveringto recover.
CEO Linda Rendle announced in May 2026 that she will step down for health reasons oncewhen the board findsnames a successor, and the board has named none yet. This leadership transitionClorox named a Chief Operating Officer in June 2026. The change of leader adds execution risk at the same timewhile Clorox is integratingintegrates GOJO and stabilizing its new SAP systemrepairs sales after the ERP switchover.
Private-label pressureManagement 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 not spread evenly across Clorox's businessabout flat in the guidance. TheA weaker consumer or more trade-down to store brands can push sales and margin below the outlook.
Store-brand pressure hurts the Household segment, which most. This segment includes trash bags and cat litter, earns. In fiscal 2026 it earned only a 10.7% margin and 16% of segment profit despite being, but it is Clorox's second-largest segment by sales. Further private-label gains here would hurt profit more than in
Walmart bought 26% of Clorox's stronger categoriesproducts in fiscal 2026. A California judge let most ofchange in Walmart's orders, shelf space or store-brand plans has a large effect on Clorox's sales.
The lawsuit for about $380 million lawsuit against Cognizant proceed in March 2026continues, but no trial date has been set. This is realistic multi-year litigation, not a near-term payout, and Clorox has recovered only a fraction of its claimed damages from insurance so farpublic.
The options market already prices unusually high volatility into Clorox shares A payment, well above a typical staples stock. This reflects real uncertainty about leverageif any, the open CEO searchis probably years away, and whetherso the FY2027 rebound holds up, withsuit does not help the next test being Clorox's Q1 fiscal 2027 earnings report, expecteddebt plan in early November 2026the 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. Dividends of $602 million were larger than fiscalFiscal 2026 free cash flow ofwas $405 million beforeafter 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, including. 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 commercial papershort-term borrowings at floating rates, mostly commercial paper. Clorox does not publish EBITDA. The EBITDA figure is forour calculation: fiscal 2026, EBIT of $913 million plus depreciation and interestamortization of $247 million. Interest cover uses the same EBIT and interest expense of $921130 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: sales rebound and leveragefull-year outlook holds. Pending. Watch: OrganicA first-quarter sales growth on track for the 3.5% to 4.5%decline no larger than management warned, an unchanged fiscal 2027 rangeoutlook and lower net debt pass; anothera cut to the sales decline or higher leverageearnings 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 BostonBarclays Global Consumer Staples Conference, Clorox management said it expectskept its fiscal 2027 outlook. Management said that first-quarter organic sales growthwill fall because of 3.5% to 4.5%the timing of retailer promotions, matching earlier guidancethat input cost inflation will be more than $200 million, and describedthat gross margin can fall a little more than the year as one of transition and repair after finishing the SAP system upgradeoutlook shows.
2026-08-03: Clorox reported full fiscal-year 2026 results. Net sales fell 5% to $6.72 billion, organic sales fell 8%, and adjusted earnings per share fell 28% to $5.53. The companyFor fiscal 2027, Clorox guided net sales growth of 13% to 14% with GOJO, organic sales growth of about 3-.5% to 4.5% organic sales growth for fiscal 2027, 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, saying she will step down for health reasons afterbut the side effects of treatment for early-stagethat prevents a return of breast cancer caused her decision. She will remainstays Chair and CEO until the board names a successor is named.
2026-04-01: Clorox completed its $2.25 billion acquisitionpurchase of GOJO Industries, the maker of Purell. The announced price was $2.25 billion, funded mostlyor $1.92 billion after expected tax benefits. Clorox paid about $2.15 billion in cash at closing, with commercial paper and a new debtterm loan.
2026-03-25: A California judge trimmeddismissed the intentional misrepresentation claim in Clorox's lawsuit against Cognizant, dismissing an intentional misrepresentation claim but letting the breachkept most of contract and gross negligence claims proceedthe lawsuit. No trial date has been setis public.
2026-03-02: Clorox paid $476 million in cash to buyfor the 20% interest that Procter & Gamble's 20% stake held in the Glad trash bagbags and wraps joint venture. The joint-venture agreement ended on January 31, taking full ownership of2026, and the Glad brandagreement required Clorox to buy this interest at fair value.
2026-02-18: In February 2026, S&P Global Ratings downgradedcut Clorox's long-term credit rating to BBB from BBB+, citing the leverage added by the debt-funded. The cut came after Clorox agreed in January 2026 to buy GOJO acquisitionwith new debt.
2025-07-22: Clorox sued its IT services contractor, Cognizant, for about $380 million in the Superior Court of Alameda County, California state court. Clorox says that during the August 2023 cyberattack, alleging Cognizant's helpservice desk handed networkreset passwords toand multi-factor login for a caller posing aswho claimed to be an employee during the August 2023 cyberattack.