Clorox Brands Are Inflation Resistant and Can Thrive in a Recession, Says CEO

Clorox Brands Are Inflation Resistant and Can Thrive in a Recession, Says CEO

Clorox CEO Linda Rendle told CNBC on Wednesday that the company’s products are “household essentials” that can withstand rising inflationary environments and tough economic times.

The company’s brands include its namesake Clorox products as well as Brita water filtration, Glad bags and Burt’s Bees to highlight a few.

As an example of Clorox’s pricing power, Rendle referenced another round of price increases planned for July to help offset higher costs and “recover margins over time.”

The CEO told Jim Cramer on “Mad Money” that Clorox brands provide superior value for the things people need to use every day, even in a recession. In 2008, during the financial crisis, “our categories held up very well, and we developed the vast majority of our brands,” she explains.

There are fears that the Federal Reserve’s aggressive measures to stamp out inflation could slow economic growth and trigger a recession. The Fed raised interest rates another 50 basis points on Wednesday.

Clorox reported a decidedly mixed quarter after the closing bell on Monday. The stock opened lower on Tuesday but closed up 3%. It added another 1.4% on Wednesday.

  • The consumer-packaged goods powerhouse reported fiscal third-quarter adjusted earnings of $1.31 a share late Monday, beating estimates but down 19% from the year-ago period.
  • Net sales rose 2% to $1.81 billion, slightly better than expected. Gross margin has been overwritten.
  • The company cut its full-year profit forecast by 20 cents, while maintaining an expected drop in net sales of between 1% and 4% for the year.

“For the first part of our fiscal year, we saw sales growth of 27% year-over-year. But this quarter, as we saw a more normalized environment, we were able to see organic growth in three of our four segments, the vast majority of our business,” Rendle said. “On top of that, we were able to grow our market share.”

Rendle said the cleaning habits that were born out of the Covid pandemic are sticky even as many aspects of life have returned to more normalized routines. The company has jumped on the trend, launching packaging solutions so people can “control the environment around them” and take the products on the go, she said, noting that Clorox is a “much larger business” than it was before the pandemic.

Leave a Comment

Your email address will not be published.