The Clorox Company (CLX) Q4 2025 earnings summary

Executive summary

• Fiscal year 2025 ended with strong margin and adjusted EPS growth, despite flat net sales and market volatility, supported by ERP system implementation and digital transformation in the U.S.

• Retailer inventory builds ahead of the ERP launch temporarily boosted sales, but underlying organic sales were down, reflecting both category softness and execution challenges in some segments.

• Share losses in Q4 were attributed to lapping high prior-year spending and dynamic consumer behavior, but brand health and household penetration remained strong for the year.

Financial highlights

• Q4 net sales rose 4% to $2.0B; organic sales up 8%, with ERP shipments contributing 13–14 points.

• Q4 gross margin was 46.5%, up 150 basis points; full-year gross margin up 220 basis points to 45.2%, driven by higher operating leverage and lower incremental expenses.

• Q4 diluted EPS increased 55% to $2.68; adjusted EPS up 58% to $2.87, with ERP shipments adding $0.85–$0.95.

• Net cash from operations was $981M, up 41% year-over-year.

Outlook and guidance

• Fiscal 2026 organic sales growth is expected to be -1% to +2% (excluding ERP impact), but net sales are expected to decline 6–10% year-over-year due to ERP shipment reversal.

• FY26 gross margin expected to be flat to down 100 basis points; Adjusted EPS guidance is $5.95–$6.30, down 23–18%, reflecting ERP shipment reversal.

• Sequential improvement is expected in the back half of fiscal 2026, driven by new innovation launches and improved execution.

• Tariff headwinds of about $40 million are anticipated, to be offset by sourcing changes, productivity, and targeted pricing.