The Clorox Company (CLX) 1 Feb 242024 Q2 Earnings call transcript

Company Profile

Participants

Lisah Burhan	executive
Linda Rendle	executive
Andrea Teixeira	analyst
Kevin Jacobsen	executive
Peter Grom	analyst
Anna Lizzul	analyst
Dara Mohsenian	analyst
Filippo Falorni	analyst
Christopher Carey	analyst
Kaumil Gajrawala	analyst
Stephen Robert Powers	analyst
Javier Escalante Manzo	analyst
Lauren Lieberman	analyst
Olivia Tong Cheang	analyst

Call transcript

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Operator

Good day, ladies and gentlemen, and welcome to The Clorox Company Second Quarter Fiscal Year 2024 Earnings Release Conference Call. [Operator Instructions] As a reminder, this call is being recorded.

I would now like to introduce your host for today's conference call, Ms. Lisah Burhan, Vice President of Investor Relations for The Clorox Company. Ms. your begin may you conference. Burhan,

Lisah Burhan

Good Thank joining thank for and you, Jen. us. you afternoon,

your call then are are Linda I few On Chair me remarks a review with the today moment, and release our we'll and had chance comments, questions. prepared Jacobsen, opening website. our has just earnings and of Linda a Kevin our on everyone will CFO. which take share hope both a and to available CEO; our Rendle, In

During based forward-looking fiscal outcomes. this differ statements, including XXXX outlook. or we may call, make current may about These on but results our statements expectations actual are from management's

In been to affect SEC. that addition, measures. could to statements filed financial forward-looking various non-GAAP Please the which statements, with factors we such refer the have may section refer certain forward-looking which identifies

for addition, section information of financial in non-GAAP the please Investor the comparable financial GAAP most of measures. directly our website reconciliation the refer section supplemental In release and measures to schedules a financial Relations the of non-GAAP to earnings our

it to Linda. I'll turn Now over

Linda Rendle

thank from you attack. and to in strong We thanks us a second joining above cyber our everyone, Hello, expectations delivered financial the on progress very the quarter, today. August recovery results for

Argentina. Continued rebuild drive the in advancement of of as top our strategies and as margin, management headwinds to currency well line growth swift effective and

and restore rebuilding of to ahead schedule, to inventories distribution. We merchandising retailer us are enabling return

we result, made rebuilding shares. a As strides market great

the our their power consumers' of lives. metric. as speaks the Importantly, we've advantaged our in consumer measured portfolio, throughout maintained results brand by strong out-of-stock our superior role This brands our superiority value daily recovery, of period to and value our and

before return to the cyber do, the it still our attack. on we're was there's to on While to the business trajectory path more right work

rebuilding performance we and margins the under we Looking to and expect challenging to volume play top to remain and role committed growing ahead, behaviors in pressure as consumers as operating Nevertheless, the lap value-seeking top line a their stronger line pricing. remain we remain environment expect continue. our

We're drive plans. rebuilding penetration volume in progress well through creation demand and well household as as growth positioned to market over strong make shares time further and distribution

in are our Given XXXX quarter, we also second the updating we outlook. full made the year progress

positioned have our build we're the the stronger, to trusted we taking marketplace IGNITE profitable diverse value more strong We in a and guided actions brands, time. investments that in confident I'm portfolio by for create play win to categories, over a the is of resilient to strategy essential right deliver making consistent, and stakeholders. long-term that appropriate company growth

and Kevin take that, your With questions. will I

Operator

our will Instructions] from question JPMorgan Chase. Andrea [Operator come today And with Teixeira first

Andrea Teixeira

when back, Linda happen of the fiscal, beats, you the the new think go go you of half of in when caught the why you the high with and implies quarter now, imply greater profitability I amazing And prior that kind kind with given the headwind. I is remarks beat? plus to first would back points commented of through given have what an walk onetime you then the as up reconcile that's the against transactional to Kevin, going gross depreciation had what vis-à-vis end it second because according improvement your and a your basis year? other last your underlying to the better and the so and on that I understand of it if But obviously, much you way. bit up prepared you half with math just implying flow kind put effects I you seems to caught are period trying numbers according my a can everything in year. just magnitude first you performance us back in margin, X% FX was end through the of wanted in gross guidance, you the just declines And XXX minus margin

Kevin Jacobsen

maybe we've you've Andrea, at with answering And it an let and stab I'll incredibly those let right just -- peers, But many take place of me anything. environment me from of know to good missed some difficult now. be that's might questions. maybe relates start a Yes, it Argentina, our as start if because a heard

business back Argentina, very and a been step we've I there time. think If think long our for in in you just about

We capable strong have very leaders managing brands. very

outlook provided you impacts should Argentina as top in including inflation through the in But incremental on as we've setting and think we know line on Argentina exception we one actions the both well that Argentina aside, the of the While flowing in this pricing, exposure loss What we impact covered terms P&L. FX fully think based higher that. taken of is we about negative Argentina, we've and negative there the today, margin. are remeasurement fully impacts talk FX our in some loss, the with of outlook and I'm to within this higher contained happy remeasurement

it And XX.X% half, to margin. the similar asking back XX.X% be if based about you gross well. back on relates about as delivered you we'll And margin fairly the gross saw, we suggests our in were front half, look As as outlook, the you half. at

consistent we're so few front out. If a at I'd items there's think what's the about from sequentially fairly looking back to point trends. And half, I half changing

higher environment. increased back of expect we more trade get the year to terms of spending In half in the continue normalized we a as headwinds, to

our all in pricing lapped We December. also now of We lapped the round U.S. pricing. last have

more And less pricing see U.S. headwinds coming of we're out from Argentina. expecting and then FX in benefit the more you'll inflation So

puts we're position a mix margins a a greater full to that offsetting as and of of improving on to half. well versus getting COC those to margin us fairly headwinds, front And in are than Argentina. We in half the front improve in basis executing incremental offsetting pricing. half that's the the with year points back projecting the year half a We're about collectively, degree And international basis. consistent benefits we're as volume trends. XXX year that back price

Now maybe I year. talked about you question, last versus the think prior

have a be you at little comps. to looking careful think the I

If our year, back half think of they gross the XXX in you margins were last look at almost I points. basis up

relatively a And the strong year. very but so we're flat, prior on performance in

Andrea, there. stop know your me answer question. Let let if that me

Andrea Teixeira

there point service obviously, It in one levels. remarks, to and and meeting space commentary. you're I regain Yes. That the of that confident I of a our had on think -- you did, like say mentioned When even fine -- Kevin. shelf sounds prepared in kind Linda the think regained you're looking, being And recently a risk initially, you in in not lot and and I some point conservative. moving pieces that that levels. kind seems think of of New you potential at York, of all recover call It like embedding service alluded the appreciated we able this were to you're to was guidance,

you did Now recover.

in on of you side the recover the you thinking So what potentially months? thinking coming especially space like up of the achieved now I'm to expecting you X I'm some had, strength could of losses the that more, continue shelf that in of reset? that not more spring now momentum why

Linda Rendle

the your and what just start Sure. significant point I'll our with in QX was which and important over-delivery. expectations maybe I'll first drove take that, and

and to point at automated outlook QX, time exactly you it a you turned and right. from where were the manual just that, we recall, we take would had where automated point ramp going we provided an to them for back be order At If knew of transition there a to us will processing, got we a up. bit that

We and was could retailers, a quarter, for to ship. what into deliver ensure shipping we significantly above we that ended to we the day that heading which deliver up are we key to time needed average appointments holiday that also order doing we for single ensure challenging have ability the every an day in which get would to normally is what time

And the could goal the majority QX, again, potential headwinds inventories we and of of accomplish. some QX. QX of by restore into by what to given end the would all on those appropriately we flow think -- end that And we're the was knowing cautious

to and of general up, who into were of and We extraordinary. above a our manager around multifunctional solely her happened get quickly were she team to model. able that. So what leaned shipping manual pre-cyber single designated ramp our and getting in charge do operating to in all And to day and day, ramp able QX, had nearly is we ship really we were automated retailers a event, inventories an that average in retailers we up rebuilt from every significantly

of XX% if distribution, our the to you average our in, we were able we height weekly at were down get if over of were down stocks. XX% able gotten of over get look digits. we result you appointments. the at mid-single We've TDPs, look that, at So to TDPs, And out of back to

is some business than cover slightly and Some I better can worse, slightly that. that,

this, at of points. Market share the is we were X down height over

were X.X%. the we weeks If point, down the you December, look X look X, week XX, ending down X X ending at at X, latest June

did and we we to to that spoke feel also happen finish merchandising. retailer what we to and and the So the were fully we they that through distribution, are have of gives I that going last in all under fact which in we about those to restore that's control, and to quarter, remaining, work have spring, that in the was of flowed the about then. have But our half back in about And QX. resets, direction, job need we and we lot dealing what us that, fact order confidence. restore But the right to this in the with talked a good addition intend to this we the our and we fully year, mainly vary maximize

levels to right clear, And restore get are They're And about have merchandising those. significantly plans. fully we we but We'll the levels service to investment back well. the good in still need we like to business feel the that, as with service levels. expect. full in better, we as We our to depressed. our we So our return half up be feel

Our value, said my as opening in have brands their maintained I superior comments.

half. work about didn't is done back not tremendous So be job QX, to do more -- in have in we we I feel clear, just the but progress, good the But I want to it.

Operator

UBS. our Peter with will next Grom question come And from

Peter Grom

are I wanted in performance. of about half you volume contributor a on price you help stronger but growth Linda, less the just then you on the year? And be incremental Does expect to what related your to thinking the to trajectory. seen as we've the lap just mentioned disruption? the as U.S. now that or to maybe us pricing to particularly it organic you of versus understand of pricing return just taking the as are growth how volume versus assume kind ask a well, Can back pricing Argentina? revenue to you prior

Kevin Jacobsen

relates and are. Sure. back Peter, what you the growth front it the the to to from transitioning half think sales as changes half about organic if

As combination to see it in That's the year. as improving volume. relates to the we've of improving half event recover continue volume volume, both see now lapped cyber to the pricing, from expect trends that well to we expect back as a of we'd

at you front the high was look half, down our single volume If digits.

now, then last so took. December, said, those mix, U.S. X improving certainly forward. in our the lapped as And we've price we I expect in of addition rounds to would to in the we volume see we And pricing go trends as

less, into And Argentina so now both and impact be very in double-digit we contributing December, favorable much to took November months. we fact, increases, U.S. in leaned have But will price. price little

to in year price will in of you positive mix continue increased see the the back so of And trade half spending. spite still

digits. landed stronger an the front strong low terms mix we fairly the So in but the how growth. of that expectation And trends half bit the from than pricing, for And I'd for sales price being of in would say a mean year, improving a overall to half organic front volume be half that back full year, we'll growing where that's be single the lower us. little front the we because get than half U.S. of still

Peter Grom

looking into Got it. how second we trying this, then thinking fiscal I about I 'XX? gross phasing? margin XX% That's Are be really opportunity signal simply color to guess may you you and just helpful. on too are provide much Kevin, but the some to should just trying be half to the the exit rate, And on recapture reading out

Kevin Jacobsen

in about the Yes, it's more back half. phasing

quarter -- be Just in in fourth for take make we're want or in to will probably sure Argentina pricing highly effect, focus it all fully that it's market. to that

to level progress margin and said I Peter, had gross cycle to super quarter Linda you I fourth to the quarter. a my as committed margins remain be of bit having continue line to back third make top the expect initiatives. to described year, this while and the now, last before advance But we'll year. I'd intend Good we'll our So not what to into to But rebuilding the gross that stronger progress done, but 'XX, know, strategic we importantly, to than as continue we that, inflation. more fully grow do I and work expand continue We is invest going margins.

So on focus we to X. continue all

I into to we year, 'XX. this make that and expect I As progress expect go as it relates solid to to margin, continue

Operator

with next move to we'll And Anna Lizzul of America. Bank

Anna Lizzul

outlook the in prepared I ask remarks. the wanted to on

where of the categories an categories you year. You you that mentioned slowdown are in impact versus more there modest resilient? particular growth think category expect half expecting back outsized any fiscal Are the a rates

Linda Rendle

a This originally 'XX, what original with consumer consumer in categories is going is the had no pressure saw as modest slowdown under to we we year we a macro to more come pressure. in be which fiscal an longer are given And assumption consistent one we of the the provided recession, the assuming as economy. all assuming on still outlook mild factors but the more under assumption

But slightly And and anything particular consistent assumption. average, we all what We that's would with be nuances slower, this. be look at would in wide essential wouldn't in categories, the in categories. on And variance that. see in of given difference those and no categories, so large consistent they're expect we'd might past seen you but if like we've them I mostly expect to call times here to that's a little there, all that out with that our household

Anna Lizzul

question And the sales earlier. organic just a follow-up on

mix Can just QX, saw to negative is us back mix. see On tell that a you the segment on in Lifestyle we year what price fiscal driving expect this? the and half the of we negative price should in

Kevin Jacobsen

Sure.

the We you bit within go it as so that forward. see second in relates occasionally And and do promotional based quite quarter Bees business, in and on specific merchandising of that that have Lifestyle, to you business. activity, packing quarter. increased merchandising that we As our Burt's holiday gift the may was to second a plans and

Operator

from come And with our next Mohsenian Morgan will Stanley. question Dara

Dara Mohsenian

is couple out but I looking to just the maybe Just think 'XX, at obviously, earnings beyond the outlook line on fiscal won't I look fiscal as know maybe today tailing 'XX. we question items. a comment of probably you directly, that looking

regaining Are think the a First, moving you pretty understanding now issue? Are have not To a a promotional impacted some of you concerns there the do how Linda, from have have to given Andrea's have near term. and from of sight? retailer parts. as not line longer-term next cropped you that relationships that might out up recently is the comfortable line the standpoint, look on an that obviously, we pricing over job systems just any that also sight environment distribution. or been think you line you competitive Do competitors top year eventually full X lot maybe about from of the volatility but that? done, update linger of question, And or

Linda Rendle

Dara. question, the for Thanks Sure.

what while the year things out So that course, closing line And important of any and out-of-stock brands. that highlight issue on commitment from grow a even brand think we obviously, year than provide strong what cyber, perspective are think we about superiority in margins. was as which again ratings, brand perspective our I continued the significantly to our And won't out maintained we outlined the But superiority is called pre-pandemic. said, rebuilding future fiscal as then, is 'XX. I you line in experienced around I'd top we of we see very you it top higher this

in the we investments to continue brands and levels, our and feel promotion the And we both this we're great XX% sales year. half, about to about increasing spend back our have going So remain advertising strong.

to Kevin expect continue earlier. expect as do And that. highlighted promotion We trade increase, we to

And innovation we those spoken plans. during fact We've cyber the the that [walled] resources off. about also incident,

remain major expect to every innovation so And plans invest across and plans. brand in innovation on those we'll our at and continue we Clorox track,

this. the great So brand health I feel about going into

into perspective, we value as in we're trading in in fact, of others. a We're said, superiority. and still seeing people we many business we food the cases, to in many category From seeing stretch times that some to that expect because in seeing tend segments moderation see our in growth. litter. across that We're offer We And fare in category well business. when wipes. premium premium seeing, our consumers We're

where the we seeing seeing I'll take and We enough. they then some back them, our moment feel we're So we to out-of-stock see challenged, we on consumer stand did them accelerating really I even can't but retailers, good another not rebound more about shelf. thank just that And get and are we're private to label. as with thank as during period,

it plans have of some in we do things done. right again, restore full have confidence strong They've the are category out strong plans, the back their they and relationships we timing have focused just that partnership will we're with unfortunate in. It right confidence, the what say stronger get job in, distribution. they focused and And Super coming then our And can both we have been how we But were growth be on I heading done. it grateful out on I they've that brands And and and those relationships our for control. will tremendous of distribution were heading given of partners. we incident, finishing on the fast to a are this and

Dara Mohsenian

comment can more, environment? I And if in the margin front. the on you And slip just Okay. Kevin, promotional can on one

You go XX%, historically. below the you still XX%. levels talked to about leaving back That's peak XX% year well at if of

response that mentioned in fiscal 'XX. Peter's question be to in progress You there will

help long-term the potential how relative margin Just time, understand us and to peak gross key that the drivers historical recovery over about potentially of you think that slope level.

Linda Rendle

Sure.

competitive that On continue up. saw half below levels those is to I'd say the that ramp expect were and merchandising we what given the merchandising. seeing deep stock out are pre-pandemic, the enteral anything in depressed fundamental as merchandising, little merchandising I price we fact not we front, for there a But we're to we're continue to rise and discount was in we're back we we what see would there of some and a way say had but But level and not expect with categories. where change, to consumer. seeing consistent here in And much more pressured where pockets seeing that of would

expect some continue in levels there's expect a see in nothing where aggressive merchandising promoting And more categories seeing price assumed out. going our we to again, to we from to but how competition We're the we we'll bit outside litter, outlook that have competition. both and our in plays competition on, to we increase merchandising beyond go that don't pre-pandemic, and back saw ours half, what and but and

Kevin Jacobsen

we'll as sure about fiscal on And progress margin, in exit XX specific. QX. you i'll I appreciate expect as and I our too 'XX, being to then, can I'm from make year gross refrain in Dara, getting more said,

XXXX. our Here's haven't expect. I But, plans yet for We what finished

The expansion cost And each we year. savings. know, couple to north continue basis you been last of doing XXX drive of XXX. years we've of EBIT target points will as margin We

drive to continue savings. we'll So cost

potentially being basis cost can assume into how normalized start that a you our margins. move by inflation. absorbed more XXX advancing see some deflation, It's cost . we're can going cost you to gross not points quickly environment, even If

smaller where some is we've as will international, lapped to we doing going but what expect we Pricing We'll U.S. environment there. still smaller get have be will that pricing. role. a play forward. So will that when the cost see play role now a We're pricing

expect which trends, well. expansion As volume to we contribute as continue to improving we will mentioned, margin certainly

XX%. back So that think We as when we'll to our progress. because hard to hard we'll to margin. fully get not said, exactly in when I It's It's initial there we make call get we're call control. going we're about talk to

Some environment we driven on we to into of to longer. still of to continues cost of year I bps bit a EBIT If our that cost get think a And savings deflation, typically, to bottom offset margin more XX out. then normal see little it ongoing. may get that cost And level plays a back line, is we than each is environment, take inflate, quickly. it it bit once take and to normalized move that more expansion how if get could be and more a you enough how XX that's the to inflation little going

XX%. to remain job to think I doing So back one that is that. get We committed

over a think to more time, after year normalized in improvement to I a year back modest cost more get environment.

Operator

will from Citi. question Falorni with And Filippo your next come

Filippo Falorni

So big recovering are look get levels, still are us a back? Linda, you total distribution X bleach there's done your of Maybe attack of trash I like categories cyber points I shelf cat if litter. bags, the particularly there's wanted plans terms color tracked to go the still back to give where in in be pre to space to could a your and data, below Maybe where categories, your few job channel moving at shelf some comment space.

Linda Rendle

Sure, Filippo.

are completely but cyber, level. so clear, an have in Just aggregate -- restoring aggregate, pre close that we are than at points we did fewer we're we enterprise distribution still to

more expected there's rest more and X down on schedule stocks we to point call in the we in it. the were the of you're to, were able driving we really and distribution litter to of them earlier, recovery. expected digits right and But in the had out cat categories accelerate and the to QX, on what over were mentioned that mid-single low QX trash things in well track point now we cat in originally distribution be particular, I we're average. as points that, trash weekly But, XX% litter. We're average auto at on and So actually our

the has perspective on litter as a the demand. that to is category from to fast playing catch first ongoing we're supply so The grown up catch-up cat

part that, We and continue year, that we prioritized a that's of to Litter And then behind. this certain reason to have set full back Cat items not that's a the is restored particularly, why expect ensure to those large shelf bring of complex yet. but to is on we the call category make slightly distribution, one progress with on that have And I'll were trash, fully we fast. it sizes that

the are just we back. categories plans to had upcoming do We the will right of the that. them we like like at But have Those But that resets. that in X of more category in QX. these plans. to have feel have are right retailers and we plans the those important we place believe items the realize look the in get rest we beginning thought And categories,

to We will do not And our progress seeing concern that. ability QX us make of gives from QX. we're perspective in any that and a anything abnormal consumer

Filippo Falorni

Kevin, X very then helpful. That's margin. follow-ups on And gross quick Great. the

it line, this First commodity neutral on the quarter. was

talked maybe then a the of expecting and you about second well. through can meaning line in You walk the And benefit? more us that on manufacturing the environment. drivers a as Are half, deflation logistics, you maybe some favorable

Kevin Jacobsen

Filippo. Sure,

it and just I'll relates inflation. maybe start all -- As to X about with talk

worth of expecting As about the inflation. you year $XXX know, into million can cost we

better but improvement tell little in commodities, based commodities, more you a a is manufacturing by we're and little in Some I of based spot that bit logistics, it's would than wage we bit on we of primarily of What in rates, curves. on in not mind, forecast forward seeing that anticipated. keep And but inflation. driven

range, generally that seeing million commodities. we're better bit a And so news in still $XXX I'd say little we're but on

or that, for out that's as said mostly having in $XXX expected exclude Argentina we million if Argentina. about reality say the factor that new and I I'd But in playing of in manufacturing inflation, generally moment, logistics. Now we before a

year we're it when We the you in you you what as get charges number at favorability pretty was now that more when look inflation Argentina, add the attachments the half year. much in of in had lapping. a of We almost that You our should logistics, is for neutral last forecasting the now end. in economy. front a in front web offset manufacturing inflation don't see but and by half seeing that front you're outcome And XXX% to we're add

are broadly we So supply the including across cost inflation, chain, seeing more commodities.

back have commodity year. unfavorable U.S. inflation but of expect being I note, mentioned so what's back earlier, driven in half little more the to from A and of the bit to I But And the so important Argentina. to this we have in the cover it we're negative in from taking. the believe a we shows and noise Argentina, work a step P&L, up pricing the to fully plan through all P&L increased the impact our

Operator

with to next Fargo. move we'll And Wells Chris Carey

Christopher Carey

that that level we impact going all anticipate we so kind are just Argentina fair it cap we a offset delayed know you flu of just of the from in just and cold should as inflation then Is We've would just broader so Number negative So pricing, the kind to forward? not couple of or some March take of And to, follow-up track a follow-up. assume Argentina. seen benefit to there as question. season a a questions any worse the quarter? I one, to into you then to see -- did the it have all a I different companies strive experience on you this methodologies. inflationary guess, how gets Then going pricing,

Linda Rendle

flu Cold this actually we're -- similar the flu level I'll with very saw cold set. Yes, Sure. and so year, Chris, previous and to just before. flu. And cold seasons all is and start that we

than last different definitely So year.

but and see typically in cold an season, average more year, last January we than like and later started it So which flu February.

is the So I assumption would say that have. normalized we

in early point, that season. we we're flu we'll the means and the and at what say and last lap experienced to flu that as obviously when And talk be cold earlier looks talk your But So it's it, will QX. we'll to impacts we we average an looking too year. because cold lap contemplated out. different very QX outlook. looks cold season. normalized, be have, cold cold and so our mostly around flu, how assumptions we date, we'll experiencing a a see do a that and like like and normal plays impact flu to normally we and it been for That's more flu. normalized And But

it, Argentina through now fully intend an pricing. very Argentina we We'll that and believe what our posture. we as as Kevin proof And the be we to strong. we do have shares be and plans move the that perspective. forward, we seeing would to see we're that offset what can reasons to And our continue be impact happens the points in From with perspective, continue our highlighted, right certainly would market

are that on watch fully with based we're strong. the what very brands seeing expect currency offset headwinds to today, we closely. Our But We'll pricing.

Kevin Jacobsen

one remeasure to the I'd as And you're is Chris, relates the item QX, Yes. on you you charge Argentina, to more devaluation remeasurement. larger to P&L. the assets I that $X.XX modeling noting quarter. Argentina a in your you things it's take the to worth have P&L. have, charge it In every mean took we add monetary

take $X.XX assumption outlook, in charge our total. QX. in the took we're going in about $X.XX a have to We We

it's P&L already a half, is but of we've remeasurement the in most the So modest date. front of the roughly impacts million there the we in but charge the back do we've given expect we're to half will year, which be to $XX taking, taken what taken fairly

Christopher Carey

questioning. then And clarification one just on some additional Okay. prior

entirely mostly up. but caught levels, to caught inventory be you're up on just So not

trends seeing in Nielsen negative example. a for data, still a basis sales And on so from the year-over-year we're standpoint

us be consumption Is would fiscal your data help. maybe that [indiscernible] to way at your QX? that least expect any going And continue you for consumption could a for should outpace fair acceleration quarter. another some would in Just then analysis? into You

Linda Rendle

What majority of we've us say to close got that pre vast that way at that and work correctly We the you've right I back have points we restored would it you're is were cyber. distribution the hearing to inventory. the still all to do

down And thing over And points. digits, about said, then so shares as low we're single up I XX I highlighted. same from down the still

do on share. impact I'd this is, will. will an and We have the too, to points work say distribution we we have X X fundamentals, output as merchandising behind thing work have those in and left to things: to we also underlying full those the all do that restore on return things and do and

time to consumers other via this out of when items have also we're stock. bought during ensure We

may that the And so ensure of get and brands them talking know work decide, The our they track, going point ensuring have back the that all restoring to merchandising, brand that do, we're something and that's that's just through tried marketing distribution to from efforts, we're through on getting have people but different not our to at we're period. by only that the purchase shoppers doing disciplined Clorox with next also but outstock who we that also we efforts during the also

Operator

with And Kaumil will Gajrawala Jefferies. our come question next from

Kaumil Gajrawala

some question winning consumers Chris' from you back on lost. segue good A of the that

to expected internally of but that's as advertising it percentage revenues I you're I a Is course it about had suppose highest guess increase. is increase? you are dollar -- You from flat year? Or over you're of holding an for sales, spend the outlook what an perspective, the a

Kevin Jacobsen

expecting increased Kaumil we're spending.

you it typically half, the about in targeting sales. know, in XX%. be spend as XX%. fact, will year, So back XX% we're And closer we This of to

continue leaning at rate. superiority we're to elevated an So investing in drive to value

rates on will intend the spend. elevated it higher be year-over-year, to based So we

Kaumil Gajrawala

Is to you activity? useful. or consumer half? of you've pressure. you little already Got information planning it. sort more And have times And could what then something seeing guys some of you're to something it maybe marry few as about for it a back you're that with promo on That's something a the maybe on talked if comment relates alluded

Linda Rendle

The difficult to our been and is a of that, to get in continued a that that we fair, stock. clean half to out read, the front year. little the we we've say consumer It in of were very completely saw categories resilient, Yes. just and be has given

a we're And on. lot come there's of what in dynamics so expected as consumer back we seeing resiliency. is in largely which we front the half, a But going from stock, lot of the

behaviors. value-seeking see to continue We

different up price label than large sizes. have seeing private So expect on seeing trading we what trading would We're expected. into trading to we seeing not into would points, opening anything we're

Again, we're shelf. reverse tried on we we of but as private certainly, get more seeing when out label back were stock, that people

other a We continue brands. of squeeze see to

well categories brand leading So label in multiple are X private that brands. tend that to be in doing the the have

back the we So all continue of half half. expect to the be those front behaviors pressure. is consumer in continued in to under the What more

our household said, because we're being resilient That essentials. categories are fairly

And this a out. the price being from of growth expecting is is shift but we've trends seen, moderation, the driver playing certainly we're So to not reversal a that of we're volume. the and mix seeing

volume over MULO from sequential If if consistently of volume continue out December, the end of trends for single out very back of improving. of we to low perspective, a back improvement in the being the course time see you digits, you from effects look half. that were of at this cyber would you the at look if At volumes universe. kind and And consumption stock down expect example,

those outlook resilient. continue, we a We've X it's at under moderation any have the into from back to value-seeking year. offering they're as in focused play are months see competitors very, categories. tough had other in beginning wallets their a merchandising in more been will behavior we we just ago. moderate. ensuring has But assumed consumer like that with slight consumer we date, that this stretched. consumers had what outside is value will we half So what We the all things And our pressure, very more our to the on see of in of consumer assumptions expected the assumptions think and But behaviors those don't consistent great continue to of change

Operator

Bank. Steve with next move to Deutsche we'll And Powers

Stephen Robert Powers

and you into pretty we catch just calendar you question. recovery the fully company some fiscal One of work several a Is back then the categories the and expect over to more on Or fully 'XX about had 'XX recovered carries half follow-up that and to that do there you really as you recover. quick The mentioned that there? expect -- exit still Congrats should talked these up that months. you have the 'XX? on Filippo remarkable is whole expectation follow-up the and to to fiscal past work

Linda Rendle

on categories, be for just in to and those some say, much there's right say we focused as at that any as We I make to we I general, over of thank make your much months. If except wouldn't this really a our or could wouldn't progress X in and QX control. I but course change in the on would Steve, comments. be back appreciate number that of perhaps, lingering expect continued QX outside -- intend possibly to you can getting QX. reset there we What QX we as Will effects commit are nice and now next point is we can. as a of retailer progress the

and has supply. while challenge been caught that litter, I to a trash think we've up a given for litter for

So on do to has a to do that is the or bring speed up to has new with incident and it itself. than from the recovering with one more that in laser-focused we're plant cyber

progress make we So that as significantly going more to that try are make QX. closely we'll QX possible, much expect will much be as watching but in as and we and be and to on progress one

Stephen Robert Powers

transformation. you summer able of track? anything of the still to start is strategic sort the that go of set lot topics you this talking sort Or progress but changes been so summer, from the August, back good. of question you back -- that long-term transformation guys Okay. of things, a have was keep since digital that on operating of back we period the ongoing working the sort I And model the pace that since over the before -- step last were we broadly been at on business trajectory? Has arc August anticipated The we the in have the had, about was to Very of so one on if company.

Linda Rendle

And just we'll have spend operating to chance a CAGNY and the this as our and Steve. and preview, talk model more overall at transformation. about a time transformation lot a Thanks, particular, at in digital

look areas being success. business then. the investing of all They're the now, take forward and company. can I talking strategic on about I critically important right say They're for X of to deeply you committed our including is we our in to But are transformation to that those the to of health the priorities, absolutely ready So long-term future. for the challenges about what

We the And commitment there. able to were executing through so we that. cyber the What that is even plan. model, the is to proceed on track say operating I'd remain absolutely and on event

#X that we'll team finalize talk was cyber from that -- safe of the getting our had during to the focused update are ensuring we've coming We'll that have time course, priority, now delays still returning side, And of in of annual and But and we as you our more we're but as months. when to and of to an secure it. more all a and we can to imagine, line event, automated committed moved some digital on about elements transformation, processes you on the of we and the from ERP. that a transformation technology the

Operator

with Escalante Javier move And Evercore next we'll to ISI.

Javier Escalante Manzo

I I gross a into the have forecast, -- particularly half with second have for I'm adding margin. a the but do up going to here, the horse problem kick dead-ish

you How and and first sales if help items, can can understand to specifically. X as on help you possibly if mention the you half. gross can be. us Argentina ForEx. So be flat impact with big second Two, One us is basically margin in that

that's number So one. point

has categories are job investing you trash you The other be are invest, are competitive. bags about with and to and [cat]. the X to to still very the or done They that

You value have competitors that stand. have a

that, then features needed things to retailers upset issue to what the So space not distribution an to that it's issue assortment value and and margin? of toward of to you create changing up going is negative like basically buy extent an a but gross a

Kevin Jacobsen

And back X this in headwinds our me have That had have a now ended devalue for expectations the solely when start on seen in with has let may of prepared to your outlook FX out sales of that's X half as of will currency than our our is mostly question about were now and anticipated. points Argentina. anticipating expectation We Argentina. Javier, economy headwinds and FX points XX%. top that year, loaded. function about going revising of the gross more we're remarks, about line. coming And you we be we Argentina line, the margin. and And The FX anticipating on impacting on we declined top

through look the at high you FX the and the back margins. gross headwinds that headwinds mid- about Argentina. you function also If we front on had points in then into And again, a plays FX puts half, of of that and X single-digit to half

FX a expect margins greater We impact. to to the gross relates as it negative hit

at point pronounced look or closer so. hit. of basis the well XXX you last if the more of half year, to So less than basis about points in again, it And be will will that XXX This year back be FX north was a year.

difficult based the maybe there. spite as finish mentioned Important we're to as impacts with margin. to both taken FX environment the a question margins of line we as actions those dealing I top note expect as result, and the grow the our though, to as was, expectation, we up, see and in sales other in of have it a on earlier, FX to offset to negative can already primarily we just that raising will Linda believe I'll take, address And pricing, relates we're gross impact can impact well you pretty spite

Linda Rendle

as the about and that brands, prices the those element of on a I Javier, we perspective. supply of a are the bit that From course, very brands is both offer. best feel which periority spoke what feel we as what the price, it piece more businesses are but on a X from value said And exactly perspective, about. we what of we there. the spoke that and lowest them litter our trash of is. value those those in define from of how great they not categories, superior about offering overall Consumers you X mentioned challenged It's confident particular health

do CAGNY in have launches of that both we Glad of in have similar. Clorox some well very are see innovations with continue We our those and Glad in that categories. other we innovation And the highlighted we both of those to of

out premium course, well of we've up our trade of to very see in stocks, calendar, through held even people cat litters. and done we And it's continue to

have we we on and little we on these their these investment important focused and are to is right back every an bit in X merchandising right categories X other confidence role the our retailers -- value in that category I and to growth play you said, providing we're be, exactly So will we consumers that, get in and about our retain extended I that and levels we feel shares plans. confident have other of categories which regain it's categories. have where the confidence level get a what these just see the proper Again, just But in we'll of the back to need to versus like that our we'll ones. they back some get distribution,

Operator

with from next Bernstein Elliott hear we'll And Research. Kellam

Unknown Analyst

But Steve's much. not alongside before digital that preempt question targeting hopefully your I the transformation, the to presentation you just hack were also long-term the top line. too had CAGNY other initiatives on to build wanted guys and

professional. line to initiatives think hoping of and like a that in those driven But that can strategic top time where the push long-term we're us raised this ago into you -- it rear update long now by I the stand now time put that mirror. X% feels long X% target you on international to hopefully starting and quite we view

Linda Rendle

course, we and our and X about transformation get leaner to think capabilities the back and right X% years and a what a that XX continues end we what that. line and had that Clorox we we that. and about to certainly ensuring XX we to fiscal consumer-obsessed done basis now, of faster get over and about, as remain. proud component it's to said, are the And that and spoke very the to growth I as And which margins CAGNY, of to where there, we'll ago points, long were expanding performance what deeply you expected from you. Thank more is X% we processes we we remain and critical And go term, at a to at we're have working actually committed 'XX, want perspective back expanding of we exactly, EBIT talked to and and is top people fashion year talk

to in see international. continue We opportunities

We to But normalizes. continue that more the saw to more in professional adoptions. expect all trend-wise, to seen things that spoke cat business as other about had our see we returning we we growth

People wellness have And an so the heightened And as health spaces have to taking we're look we saw and remains. today, natural are a and still still people care interest people disinfecting, we their data cleaned it of category that, talents in generally for at increased their more. We need disinfected. which see have litter. and seeing

tailwinds things Brita natural water like have So and consumption.

same Minerals have tailwinds. and continues Our Vitamins, the business, natural to Supplements thing

we're X% about and way. all do at of long committed CAGNY, in pulling transformation and back consistent all term. over right get a I 'XX. top line are we coming of that we'll fiscal of do the to were and to that And path remain that X% So speak the buckets more we where right levers have but profitable on the year in to to And out order the to that. to right feel we all

Operator

Lauren Barclays Lieberman to next with Capital. move we'll And

Lauren Lieberman

to now retail growth It's way to right? it a outlook the by looking the inventory I are that sales higher rebuilt. conversation So fiscal XQ. But and recovery that mid-single mid-single-digit about So end you inventories just the levels I was expectations rebuilt talking was digits. quarter that of remember that with fact customer you say and growth, were least. said plan sales tying back, was amazing when you and to be last than the But was expected in of

So -- you an I visibility open cyber, can question. for the tie pre those forecasting, is if the together me? things even think, X just the just think you Because I in back go to incredible. like of of outlook the ask have pattern it question exceeding a your own But what this question goes is also you visibility. of a if way, other was if the do happens And

Linda Rendle

a for what try me to paint let picture happened Lauren, in QX.

page. all same So on exactly we're the

of did You is are to QX. faster. right build majority to of inventories vast we that we happened What by the say that end expected the

a the in impact quarter. loss of less is get you what So consumption

we can fundamentals earlier to return confidence call take that the And positive of December, us earlier our line. quarter. So up we increased you a course, all back that's X and the did merchandising really two, doing impacts the do we see a Not difference the want that to the instead the we top from half. do. we perspective and only because which of of so in of of we stronger have it, weeks great last our And that outlook stocks, by And less that. you that gave out in half terms result back that, see categories as in has of overdelivered of retailer a but significantly

the have less really consumption we because inventories is in had than we the expected. quarter that's So lost faster difference returned

Lauren Lieberman

Okay.

complexity in natural the and might lineup that the had that talking -- restoring a the the I be in on That's fantastic. you'd might business Burt's holiday Okay. that right, of Burt great When at short. where feel and Burt, then you in at SKUs trends look that also quarter. merchandising a spot when of December, like fall time, clearly just saw just And all of be I the we the you're business actually lifestyle, because about challenge

that a it's of is kind get pretty felt was business to to Or a for to was that tough little there that and that able I'm one a is be because So on be -- holiday I'm going merchandising it the confused seasonal an same story? in brand important -- like just to that time my understanding?

Linda Rendle

December we we importance you on get feel the majority we period. we flu, ensure holiday exactly cold actually could didn't and push had was but holiday, for support our which able that has the And the good. back December, a to I X big And places out. do of was as the correctly did. positive get one But performance of of to to say, certainly about it that most remember we out, news, in challenge. we the that would certainly cold get talked is distribution we that -- if it than were was stronger on Burt's would you to didn't were holiday we good Lauren, an and impact, it got of restored focused that from but did be. much that. than places anticipated. flu, Burt's of we vast we expected protect we which a second, Yes, I unfortunately, it out, bees all recall, more But all highlighted then and right that for we And and say even of

Lauren Lieberman

Okay.

Okay. for and with and the day, final I'm pieces thing, Perfect. because, and us just gross jumped normal would as more lot as elevated last carriers different. elevated talked that will. the in contracted quarter for sorry, know had Kevin, and Linda, cost end logistics is there would out vein, one was logistics, pretty using put one above that I well but this if there's And many right, going also Bill, every costs like where you're you're and so you trying be Again, being On quarter be that. up mentioned, you normally a be back about what pieces logistics that to you but freight you'd then really of to that margin, together, this shipping that beyond that area,

of of that's I'm differently it out not question fines. played retailer area what -- So was or just kind of another

mentioned like difference you something think quarter seemed prepared that within that pretty the itself. have should significant that elevated I versus carried but a the in remarks, costs,

Kevin Jacobsen

combination both remember stronger quarter gross margin But incur expected, came just think you second higher When for in upcharges did exactly correct. about we what the we the the the not line. Yes, top we highlighted, anticipated. of exactly you Lauren, you than

said we get shipments. the priority said to our over loads we fully of that on the full is can, takes manufacturing get some truck of that incur we to product logistics plants talking to expect We as we to And product running than all upcharge to as quickly. job was additional route and do when remember, quarter, less you that of more out done. quickly were and prepared we form time, If were available, back there one last shelf that get

partners retail Linda our here. A and as mentioned, our credit to team, to credit a

done a expected. we full using up It that charges. As to did manner. did product lead we move were we have trucks. even able incur We being We to quarter. And we more got not in faster that that quickly, to carriers. retailers, on than getting do the to did very because We're in full mostly efficient mostly our the

really But fact do we prioritizing that expecting it's us spend more executing in would more, getting so prepared to And to. than we going quarter. on that didn't the anticipated shelf, went have we the in we about just it and effectively into are we're resulted to product we as have

Linda Rendle

we were make some another on really questions it one go. operating Unfortunately, on were we'd apply I it. our comment never learned maybe to we have hoping good Lauren, our Just we transformation we situation. to but ready there continuing lot we model, things one, and and think COVID are again, were And the I'm is, of a to of applied that proud the

and able lot able trade-offs. inventories thing of on requiring end-to-end is she sees be about this restore operating to getting overtime. Kevin matters, was to our make able leader just her and do putting focused to calls who were in things business output And a who second what team is those The charge spoke not do and that, laser a model, all an the of to

take unit QX was that those one, to work Our ensure we could choice model. decision that That's to consumer and we've just important down, do to output change that would up more focused as and much would business an made our I early real in But and operating and we that as plug knew driving we our we but inventories on QX. customer been the in of fast. be could what focused, more we a

Operator

Our with comes Olivia James. from Tong Raymond next question

Olivia Tong Cheang

Great. And on great improvement. work the

But you have the the is longer are step as for stay your In second you're macro no talk the for expecting you talked about current now before. half, that what could expectations terms of just the had recession the way or about how, backdrop, you you what -- this there before? in similar not be as going had first to to to saw is environment a that down much to we half still

Linda Rendle

Olivia. Okay,

that's and macroeconomic On exactly the consumer front, right.

look released a recession. but And we consumer. We then expecting of our would we months course, meant recession mild it stretched is ago, assumption. an leads us at continue categories And around an categories to will has essentials. what the the you be will impact outlook are feel stressed. when no household really, us by given changes, to believe we'll we and longer in a us, we play fact that we for our that's that And if We moderate X to been out. impact that that have see mild to certainly more environment be said adjust it start consumers And -- the if playing more

their are up the a cash, about a on conscious remains consumer. that place are moderate pre-pandemic impacts adds assumption. That's that their extra more of value really a the are be date. think their has don't they've And see the continued discretionary them been though that high. we things showing where down they we they as have that. been even value and resilient will Again, a dollars. seeking. our We impact goods down categories, see to think seeing are But we them no that spend to consumer consumers we all categories savings disposable our pressured of seeing impact We've to cumulative while. more credit. how gotten more to value in are to have for use They they longer behaviors that seeing of levels. But the employment shift and And down consumers We're now as

item sizes. off they of the They not our are the off at They premium using stretching multipurpose. value And feel willing superior like convenience. I products, They're willing earlier, are into opening And more an They're same mentioned they're them they because into points. to as trade trading they're seeing larger up efficacy. to might time, price trading trading their to given we're be dollar. is trade not

just things to So but there. are mild under the anymore, factors we're in a But consumer out believe not continue be all we macroeconomic of, seeing those out. think play just the more will we all of pressure, recession that the form

Olivia Tong Cheang

do Got That's of Because understand, the past said cyber takes the with attacks, to little line you'll to that little stand And attack a of you you where promotion now had where level your I'm on you're helpful. sure the your expectations levels? obviously, year happened. putting August your of given do Just cyber it. that to perhaps wondering your the more happened? lot just the But the merchandising today, puts going of we'd to started into bit relative thinking end in a in there's merchandising before target think year, story obviously, a what's expectations merchandising year. promotion and bit more versus in the relative then of and trying make very in you what terms aside promotion,

Linda Rendle

year, the of a market half Yes. On on expect the we're consumer course, the We we will that introduce got things that we great which beginning to innovation. in could returning the focused ensuring innovation, to is pre-pandemic the expect we that closer to been the that levels, higher and merchandise. and but to right merchandising and at had begin are pre-pandemic think up like to had releasing to we and offer doing than for same prioritize situation, out-of-stock And back don't assumption, to certainly, that people ensuring we we new it pick But supply of saw assumption levels. items level returning a consumers that more stressed exceed we value. up. return as and continuing And promotion distribution would shares, given QX had dip now before we

over happen the So pre-pandemic our it expectation of we levels, expect merchandising than and getting to was and continues that see QX. last closer be. increase year. that's We'll what QX course what to to

Operator

Rendle, the turn like now program you. This Ms. session. back question-and-answer I'd concludes to the to

Linda Rendle

everyone. you, Thank

we progress priorities quarter. today, covered strong made in our As we second the in

value with from drive we're the delivering excellence Until growth do to presentation February. and rebuild upcoming please to stay in market creation. margin. deliver earlier our focused mentioned to fully you place at on Conference While shareholder IGNITE Guided we then, sharing with line top recover our our on we're have call, long-term to plans CAGNY look and I to right still in the by SKUs in incident, we the confident in more strategy, cyber everyone. And executing work the as in forward more well, there's the

Operator

call. for concludes Thank you conference This attending. today's

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