The Clorox Company (CLX) Q4 2025 earnings summary

Executive summary

• Fiscal year 2025 ended with strong margin and adjusted EPS growth, despite weaker than expected top-line growth and a challenging second half marked by market volatility and macroeconomic uncertainty.

• Retailer inventory build ahead of a major ERP implementation temporarily boosted shipments and sales, creating significant timing noise between FY25 and FY26.

• Digital transformation advanced with the completion of a major U.S. ERP implementation, expected to unlock long-term productivity and digital capabilities.

• Execution challenges in certain segments, notably Kingsford and Cat litter, impacted share performance, though brand health and household penetration remained strong.

• Consumer categories slowed in the back half of the year due to macroeconomic uncertainty, with sluggish consumption trends expected to persist into early FY26.

Financial highlights

• Q4 organic sales growth was about 8%, with ERP shipments contributing 13–14 points, but underlying sales declined approximately 5% year-over-year.

• Q4 gross margin was 46.5%, up 150 basis points due to ERP shipments; full-year gross margin rose 220 bps to 45.2%.

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

• FY25 adjusted EPS up 25% to $7.72; net cash from operations was $981M, up 41% year-over-year.

• Price/mix was negative 4% in Q4, driven by one-time trade spending adjustments and lapping prior year merchandising events.

Outlook and guidance

• FY26 net sales expected to decline 6–10% year-over-year, with organic sales down 5–9% due to ERP shipment reversal.

• FY26 organic sales growth guidance (excluding ERP impact) is -1% to +2%, with gross margin expected to be flat to down 100 bps and Adjusted EPS guidance of $5.95–$6.30 (down 23–18%).

• ERP-related inventory build in FY25 will reverse in FY26, creating a 3.5–4% headwind to reported sales and impacting Q1 and Q4 most significantly.

• Innovation pipeline and net revenue management initiatives are expected to drive sequential improvement, especially in the back half of FY26.

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