Reports sales and earnings decline primarily due to expected impact of ERP transition
OAKLAND, Calif., Nov. 3, 2025 /PRNewswire/ — The Clorox Company (NYSE: CLX) today reported results for the first quarter of fiscal year 2026, which ended September 30, 2025.
First-Quarter Fiscal Year 2026 Summary
Following is a summary of key results for the first quarter, which reflects the impact from incremental shipments associated with the enterprise resource planning transition in the U.S. (incremental ERP shipments) in the prior fiscal year and the prior divestiture of the Better Health Vitamins, Minerals and Supplements (VMS) business. All comparisons are with the first quarter of fiscal year 2025 unless otherwise stated.
At the end of the fourth quarter of fiscal year 2025, the company shipped about two weeks of inventory ahead of consumption as retailers built up stock in anticipation of its ERP transition. As retailers drew down on these inventories this quarter, it resulted in year-over-year shipment decline.
Net sales decreased 19% to $1.43 billion, primarily driven by lower shipments related to the ERP transition. Organic sales1 decreased 17%, driven mainly by lower volume related to its ERP transition.
Gross margin decreased 410 basis points to 41.7% from 45.8% in the year-ago quarter, primarily driven by lower volume and higher manufacturing and logistics costs, partially offset by cost savings.
Diluted net earnings per share (diluted EPS) decreased 19% to $0.65 from $0.80 in the year-ago quarter, primarily due to lower net sales in the current period and partially offset by the loss relating to the divestiture of the Better Health VMS business in the prior period.
Adjusted EPS1 decreased 54% to $0.85 from $1.86 in the year-ago quarter, primarily due to lower net sales related to its ERP transition.
Year-to-date net cash provided by operations was $93 million compared to $221 million in the year-ago period, representing a 58% decrease, primarily due to the impact of its ERP transition.
“This quarter’s ERP launch marks a significant milestone in our transformation journey, empowering faster execution, greater productivity, and deeper insights — all aimed at delivering superior value to our consumers,” said Chair and CEO Linda Rendle “As with any rollout of this scale, we experienced some temporary disruptions that affected our market share. With the majority of the rollout now behind us, our focus is now squarely on accelerating profitable growth through innovation and strong demand-creation initiatives in the second half of this fiscal year. Leveraging our rich consumer insights and new advanced digital tools, we’re well positioned to drive growth and continue delivering superior value even as consumers navigate ongoing uncertainty and volatility.”
This press release includes certain non-GAAP financial measures. See “Non-GAAP Financial Information” at the end of this press release for more details.
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1Organic sales growth / (decrease) and adjusted EPS are non-GAAP measures. See Non-GAAP Financial Information at the end of this press release for reconciliations to the most comparable GAAP measures. |
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Strategic and Operational Highlights
The following are recent strategic and operational highlights:
Key Segment Results
The following is a summary of key first-quarter results by reportable segment. All comparisons are with the first quarter of fiscal year 2025 unless otherwise stated.
Net sales decreased 19%, driven by 18 points of lower volume and about 1 point of unfavorable price mix. Lower volume was mainly driven by shipment decline as retailers drew down on the incremental inventory they built in advance of its ERP transition in the fourth quarter of last fiscal year.
Health and Wellness (Cleaning; Professional Products)
Net sales decreased 19%, driven by 16 points of lower volume and 3 points of unfavorable price mix. The volume decrease was primarily due to lower shipments related to the ERP transition. Unfavorable price mix was primarily driven by strong shipments to the Club channel.
Segment adjusted EBIT2 decreased 47%, primarily due to lower net sales and higher manufacturing and logistics costs.
Household (Bags and Wraps; Cat Litter; Grilling)
Net sales decreased 19%, driven by 18 points of lower volume and 1 point of unfavorable price mix. Lower volume was primarily due to lower shipments related to the ERP transition.
Segment adjusted EBIT decreased 55%, primarily due to lower net sales.
Lifestyle (Food; Water Filtration; Natural Personal Care)
Net sales decreased 23%, driven by 22 points of lower volume driven mainly by lower shipments related to the ERP transition and 1 point of unfavorable price mix.
Segment adjusted EBIT decreased 42%, primarily due to lower net sales, partially offset by lower advertising investments as compared to the prior period.
International (Sales Outside the U.S.)
Net sales decreased 2%, mainly driven by lower volume, primarily due to lower shipments related to the ERP transition. Organic sales decreased 2%.
Segment adjusted EBIT decreased 46%, mainly driven by higher manufacturing and logistics costs.
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2 Adjusted EBIT is a non-GAAP measure. See Non-GAAP Financial Information at the end of this press release for reconciliations to the most comparable GAAP measures. |
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ERP Transition Impact
During the fourth quarter of fiscal year 2025, retailers placed orders in advance of the company’s ERP system transition in the U.S. to minimize any potential inventory impacts during the implementation phase. During the first quarter of fiscal year 2026, retailers depleted this inventory, resulting in lower shipments. From a year-over-year sales growth perspective, the reduction in sales from this inventory draw down translates to about 7.5 points of decline in fiscal year 2026 as compared to the higher base in fiscal year 2025. Inventory draw down is expected to reduce fiscal year 2026 earnings per share by about 90 cents. In comparison to the higher base in fiscal year 2025, this results in a year-over-year reduction of about 30% to fiscal year 2026 diluted earnings per share and about 23% to fiscal year 2026 adjusted earnings per share.
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Fiscal Year 2026 |
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Net sales (percentage change versus the year ago period) |
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Three months ended |
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9/30/2025 |
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Net sales growth / (decrease) (GAAP) |
(19) % |
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Add: Foreign Exchange |
— |
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Add/(Subtract): Divestitures/acquisitions |
2 |
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Organic sales growth / (decrease) (non-GAAP) |
(17) % |
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Note: Approximate impact from incremental shipments related to ERP transition |
(14) % |
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Diluted earnings per share |
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Three months ended |
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9/30/2025 |
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As reported (GAAP) |
$ 0.65 |
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Digital capabilities and productivity enhancements investment |
0.20 |
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As adjusted (non-GAAP) |
$ 0.85 |
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Note: Approximate impact from incremental shipments related to ERP transition |
$ (0.90) |
Fiscal Year 2026 Outlook
The company is maintaining its full year outlook for net sales, gross margin and adjusted EPS. The impact of the order fulfillment challenges experienced earlier in the year, which led to consumption and market share losses, keeps the company’s current expectations towards the lower end of the range. This guidance also reflects slightly lower input costs and a strengthened demand creation plan to support share and sales growth in the second half of the fiscal year.
The company is confirming the following elements of its fiscal year 2026 outlook:
The company still expects net sales to be down 6% to 10%, including less than a point of negative impact from the divestiture of its VMS business and foreign exchange rate changes. Organic sales are still expected to decrease 5% to 9%, including a negative impact of about 7.5 points related to the reversal of the impact from incremental shipments associated with the ERP transition in the prior year.
Gross margin is still expected to be down 50 to 100 basis points. The reversal of the impact from incremental shipments associated with ERP transition in the prior fiscal year is expected to result in about 100 basis points of headwinds.
Selling and administrative expenses are still expected to be about 16% of net sales. It continues to include about 90 basis points of impact from the company’s strategic investments in digital capabilities and productivity enhancements.
Advertising and sales promotion spending is still expected to be about 11% of net sales, reflecting the company’s ongoing commitment to invest behind its brands.
The company’s effective tax rate is still expected to be about 24%.
Fiscal year diluted EPS is still expected to be between $5.60 and $5.95, a year-over-year decrease of 14% to 9%, respectively. This includes the negative impact of about 90 cents related to the reversal of the impact from incremental shipments associated with the ERP transition in the prior fiscal year.
Adjusted EPS is still expected to be between $5.95 and $6.30, or a decrease between 23% and 18%, respectively. Adjusted EPS excludes the long-term strategic investment in digital capabilities and productivity enhancements, estimated to be about 35 cents. This includes the negative impact of about 90 cents related to the reversal of the impact from incremental shipments associated with the ERP transition in the prior fiscal year.
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Net sales (percentage change versus the year ago period) |
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Fiscal year 2025 |
Fiscal year 2026 full year outlook |
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Impact |
Low |
High |
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Net sales growth / (decrease) (GAAP) |
0 % |
(10) % |
(6) % |
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Add: Foreign Exchange |
— |
— |
— |
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Add/(Subtract): Divestitures/acquisitions |
5 |
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