Clorox CEO Stands By Bet on Cleaning Boom Despite Sales Drop
(Bloomberg) -- Clorox Co. Chief Executive Officer Linda Rendle is standing firm in her bet on the longevity of consumer demand for the company’s disinfectants, despite investor concerns that the pandemic-driven hygiene boom is gone.
“We knew it was going to moderate, it just moderated faster,” Rendle said in an interview late Tuesday, speaking of demand for wipes. “But it hasn’t dipped below any level that we have expected. Predicting a pandemic is like predicting the wind.”
The 43-year-old Rendle, who took Clorox’s helm last September as the youngest female CEO of an S&P 500 company, responded to last year’s shopper frenzy for disinfectant products by investing in extra production capacity for wipes. In March, even as Americans grew more confident in vaccinations and accepted that surfaces had never really spread the coronavirus, Clorox ramped up wipe output at a plant outside Atlanta. The CEO said at the time that demand would prove “sticky.”
Tuesday’s earnings report showed the appeal was more slippery than she’d thought, as Americans got vaccinated faster than the company expected and businesses reopened. The company’s shares plunged after it said organic sales fell 10% in the three months ended June 30. The largest unit decline, 17%, was in health and wellness -- home of those disinfectant sheets.
Clorox isn’t alone in having to contend with a waning pandemic. In February, Hanesbrands Inc. reversed course on its production of masks because personal protective equipment was no longer “a long-term growth opportunity.”
Oakland, California-based Clorox now expects organic sales, which strip out items like currency swings and acquisitions, to decline by 2% to 6% in the current fiscal year. Yet the company still has “strong confidence in the future trends,” Rendle said, noting that consumers are still using cleaning products more than they were before the pandemic. As cases of the delta variant surge across the U.S., the company will be ready to meet demand if it spikes again.
“Every indication that we’re seeing continues to give us that confidence,” Rendle said. “We’re not going to get it right on a weekly basis, a monthly basis, but we’re pretty confident that consumer behavior has changed.”
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