Clorox Navigates Turbulent Transition, Maintains Resilience

In the fiscal Q1 2026, The Clorox Company (NYSE:CLX) reported a 19% drop in revenue to $1.43 billion compared to the same period a year earlier. The company attributed this decline to reduced shipments tied to its ERP (Enterprise Resource Planning) system transition. Organic sales also fell 17%, largely due to lower volume linked to the ERP shift.

Gross margin slipped by 410 basis points to 41.7%, down from 45.8% a year ago, as lower volume and higher manufacturing and logistics expenses weighed on profitability. However, CEO Linda Rendle highlighted the successful rollout of Clorox's new ERP system in the US, calling it a major achievement that strengthened the company's digital foundation and opened doors to new value opportunities.

Despite the challenges around the ERP transition, Rendle noted that Clorox is already seeing benefits take hold across its operations. Management expects organic sales to decline at a low single-digit pace in the first half of fiscal 2026 and then rise at a low single-digit rate in the second half, excluding the effects of the ERP transition.

CFO Luc Bellet added that the US retail category will likely stay subdued, with growth projected between 0% and 1%, which remains below the long-term trend. Nevertheless, Clorox remains focused on navigating the turbulent transition and maintaining its resilience in the face of these challenges.