tapebrief
CLX · Q2 2026
Preliminary brief— based on press release only. Full analysis including management tone and Q&A will be added when the transcript is available.

CLX · Q1 2026 Earnings

Clorox

Reported November 3, 2025

30-second summary

Organic sales fell 17% in Q1, comprising ~14 points of ERP-reversal drag (per the company's Q1 disclosure) plus ~3 points of underlying decline — consistent with Bellet's framing of front-half ex-ERP organic at "negative low single digits." Management reaffirmed every FY26 line — net sales -6% to -10%, organic -5% to -9%, adjusted EPS $5.95-$6.30 — while pointing to the lower end of the range. Q2 organic was guided to "low single digits" negative per Bellet, with the back-half ex-ERP framed as "positive low single digits"; the H2 inflection depends on whether the comparison is ex-ERP (where management expects positive low single digits) or reported (where the Q4 ERP comp still distorts). Tone walked back materially from Q4: ERP disruption now extends through the third and final phase this winter, market share losses are explicitly "more than anticipated," and Bellet conceded the upper end of the FY range would need "everything to eat on all assumptions."

Headline numbers

EPS

Q1 FY2026

$0.85

Revenue

Q1 FY2026

$1.43B

-19.0% YoY

Gross margin

Q1 FY2026

41.7%

Key financials

Q1 FY2026
MetricQ1 FY2026YoYQ4 FY2025QoQ
Revenue$1.43B-19.0%$1.99B-28.1%
EPS$0.85—$2.87-70.4%
Gross margin41.7%—46.5%-480bps

Guidance

Company reaffirmed full-year EPS and sales guidance despite Q1 organic sales missing by ~8–12 points, signaling confidence in H2 recovery anchored to ERP transition completion and market share recovery.

Guidance is issued for both next quarter and the full year. Both may appear below.

Actuals vs prior guidance

MetricPeriodPrior guideActualΔResult
Organic Sales GrowthQ1 FY2026Not explicitly guided for Q1-17%Significantly below implied guidance; Q1 experienced acute ERP transition headwindsMissed
Gross MarginQ1 FY2026Down 50 to 100 basis points (implied for full year, not Q1-specific)41.7%Q1 gross margin held up better than full-year guidance midpoint suggests; full-year guide implies cumulative margin declineBeat

New guidance

MetricPeriodGuideYoY
Organic Sales GrowthQ2 FY2026Low single digits negative—

Reaffirmed unchanged this quarter: EPS (GAAP) ($5.60 to $5.95), Adjusted EPS (non-GAAP) ($5.95 to $6.30), Net Sales Growth (-6% to -10%), Organic Sales Growth (-5% to -9%)

Segment performance

Q1 FY2026
SegmentQ1 FY2026YoY
Health and Wellness$0.565B-19.0%
Household$0.362B-19.0%
Lifestyle$0.245B-23.0%

Platform metrics

Q1 FY2026
SegmentQ1 FY2026
Organic Sales Growth-17%

Profitability

Q1 FY2026
SegmentQ1 FY2026
Health and Wellness Adjusted EBIT$124M
Household Adjusted EBIT$27M
Lifestyle Adjusted EBIT$38M
International Adjusted EBIT$19M
Operating Cash Flow YTD$93M

Other KPIs

Q1 FY2026
SegmentQ1 FY2026YoY
International$0.253B-2.0%

Management tone

Q2 ERP pre-build → Q4 own-goal acknowledgement → Q1 walked-back recovery confidence with deeper share losses.

ERP narrative pivoted from "transitory" to "extended." Last quarter Bellet framed ERP as a Q1 air pocket with margin impact being "just noise between years." This quarter, the press release confirmed the company "successfully completed the first two phases of its U.S. ERP implementation and is on track to finish the third and final phase this winter." Linda said "we have largely recovered our inventories from the period during the ERP implementation disruption" and that the company is "for the most part" back in stock. The signal: implementation work extends into the winter, and inventory normalization is a present-tense process, not past.

Market share losses owned more sharply than at Q4. At the Q4 call, Rendle said "we didn't deliver" — directional but framed as execution. This quarter the language hardened: "Unfortunately with the ramp up that we had on our ERP, it did cause us to lose more market share than we had anticipated... we can't say we're satisfied with that." The explicit "more than anticipated" qualifier moves the storyline from temporary out-of-stock effect to a brand-defense problem.

Back-half recovery now framed as needing perfect execution. The most telling phrase from this call: "it's fair to say that we would need everything to eat on all assumptions to meet on the high end... it would be a pretty robust sales in the back end... we would have great execution on innovation and demand creation plan." That is materially more hedged than Q4's confident framing of back-half innovation ramp. The FY guide is reaffirmed but the language reveals the band is increasingly aspirational at the top end, with management explicitly pointing to the lower end.

Category growth disappointed against management's own expectation. Bellet noted "category growth was about flat... we could have expected category to be a little bit better than that." The contingency planning framing — Linda noting Clorox plays in essential categories that "fuel people's everyday lives" providing a floor at 0-1% growth — is the working scenario, but the bar was lowered and not met this quarter.

Gross margin walk shifted from commodity-led to cost-pressured. Q4 framing was commodity tailwinds carrying underlying margin. This quarter Bellet acknowledged "we did have to incur additional expenses during the first quarter to deal with the disruptions... we increased a little bit both trade spending and advertising," and guided to "the lower end of the range" on full-year gross margin. The Q1 41.7% print held up surprisingly well, which means the -50 to -100bps full-year guide concentrates margin pressure into Q2-Q4 — Bellet flagged "pretty robust gross margin expansion in both Q3 and Q4" as the path.

Recurring themes management leaned on this quarter:

ERP implementation disruption extending beyond initial Q1 expectations into Q2/Q4Market share losses worse than anticipated; not satisfied with current performanceBack-half recovery heavily dependent on innovation and execution with significant uncertaintyConsumer value-seeking behavior and elevated competitive promotional activity across categoriesCategory growth remains muted (0-1%) with floor but limited upside visibilityGross margin pressure from incremental costs offsetting commodity benefits

Risks management surfaced:

ERP implementation disruptions extending into Q2 and beyond; fill-rate and inventory normalization ongoingMarket share losses in key categories (trash, litter) exceeding expectations due to out-of-stocksSustained competitive promotional activity in trash and litter potentially destroying long-term category valuePrivate label share gains in specific categories (Brita filters, bleach) among price-sensitive consumersConsumer environment could deteriorate further, worsening promotional intensity and value-seeking behavior

Answers to last quarter's watch list

Q1 FY26 organic sales reversal magnitude — Organic sales declined 17%, comprising ~14 points of ERP reversal (per the Q1 press release disclosure) and ~3 points of underlying decline that Bellet confirmed on the call ("declined about three points"). Within that ~3pts, management cited ~1pt timing benefit offset by ~3pts of out-of-stock impact, putting true underlying performance at ~-1%, consistent with the front-half "low single digits negative" ex-ERP framing. Status: Resolved in line
Underlying gross margin ex-ERP — Q1 gross margin of 41.7% held up better than the FY guide midpoint implies for the quarter, suggesting the ex-ERP underlying trend has not yet cracked. However, management guided to "the lower end" of the -50 to -100bps full-year range and flagged incremental ERP costs plus elevated trade/advertising spend, meaning Q2-Q4 will absorb concentrated margin pressure. The "nothing structural" narrative survives Q1 but the burden of proof shifts to H2.
Continue monitoring
Cat litter, Glad and Kingsford share trajectory — Management cited continued share losses in trash (Glad) and litter specifically, with sustained competitive promotional intensity flagged as a risk to "long-term category value." Private label gains in Brita filters and bleach were also called out among price-sensitive consumers. Kingsford was discussed as a merchandising and price-pack-architecture execution item — adjustments at July 4 and Labor Day grew household penetration — rather than as a flagged share-loss category. Status: Resolved negatively for trash and litter; Kingsford repositioned as execution item
Tariff exposure update — Bellet confirmed the tariff estimate remains unchanged at ~$40M headwind for the year. Status: Unchanged
Adjusted EPS bridge for FY26 — Adjusted EPS guidance reaffirmed unchanged at $5.95-$6.30, with management pointing toward the lower end. Bellet's "everything to eat on all assumptions" framing is the meaningful new disclosure — the band is intact but the upper half is increasingly conditional.
Continue monitoring

What to watch into next quarter

Q2 organic sales vs the "low single digits" negative guide: management framed Q2 reported organic at low single digits negative, including ~1 point of timing headwind from early Q1 shipments. A materially worse print would compress the back-half ex-ERP "positive low single digits" math.

Gross margin Q2: management guided full-year margin to "the lower end" of -50 to -100bps with "pretty robust gross margin expansion" expected in Q3 and Q4. A Q2 print well below ~41% would mean Q1's relative resilience was timing, not underlying.

Trash and litter promotional intensity: management flagged sustained competitive promotional activity in trash and litter potentially destroying long-term category value. Watch Household segment EBIT margin (Q1: $27M on $362M = 7.5%) — further compression signals Clorox is funding promo to defend share rather than letting it walk.

ERP completion confirmation: the third and final implementation phase is scheduled for this winter. Any commentary on a second wave of fill-rate disruption would invalidate the "we're through the hard part" framing.

Innovation pipeline disclosure: management leaned heavily on "innovation across all major brands" without quantification this quarter. Watch the Q2 print for named SKUs, distribution gains, or scanner share data — without specifics, the back-half innovation story is rhetoric.

Sources

  1. Clorox Q1 FY26 press release, November 3 2025 — https://www.sec.gov/Archives/edgar/data/21076/000002107625000051/ex991-pressreleasedatednov.htm
  2. Clorox Q1 FY26 earnings call commentary (Q2 organic framing, ex-ERP front/back half cadence, ERP narrative, tone shifts)

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