Analyst Note| Erin Lash, CFA |
CEO Linda Rendle has endured an onslaught of challenges since taking the helm at Clorox almost a year ago. When she moved into the corner office, Clorox was flying high as consumers gravitated toward its mix of cleaning and disinfecting fare. However, the dissemination of vaccines (particularly in its home market--more than 80% of total sales) combined with a rampant surge in broad-based cost pressures (qualitatively referred to as unprecedented relative to the last few decades) has constrained sales and profits of late. As a result, fiscal 2021 fourth-quarter organic sales plunged 10%, and gross margins eroded a whopping 970 basis points to 37.1% (the lowest we’ve seen). And this has weighed on its share price, now down nearly 20% since the start of calendar 2021 after more than 30% appreciation in 2020.