The Clorox Company (NYSE:CLX) Q2 2023 Earnings Call Transcript

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Linda Rendle : Kevin, what you’re seeing in the latest data is what we see from a Q2 perspective in that promotion is still below where it was pre-pandemic across our categories. It’s higher than it was a year ago in our categories, but definitely lower than pre-pandemic, and what we’re hearing from retailers, which you would expect, is how do we continue to keep our categories healthy. So it’s not a discussion on promotion necessarily. It’s a discussion on how we have the right set for — with the right distribution for our products. How we can lean into innovation and drive value from a market basket perspective from a retailer perspective. But we are not hearing in a normal amount of level of interest in promotion because they know that’s not usually the right way to drive the category we want to use promotion very strategically in times of the year where we can ensure that consumers like back- to-school, for example, or cold and flu, where we know people are looking for our products, and we can introduce them to innovation or remind them to buy.

So those conversations continue to be really constructive and we’re mutually focused on ensuring the categories are healthy and doing it the right way.

Operator: Our next question will come from Lauren Lieberman with Barclays Capital.

Lauren Lieberman : Great. First thing I wanted to ask about was the performance in household because the volume growth was pretty striking. So just curious if you could tell us a little bit more about which of the businesses had volumes up? And if there was any of the merchandising attached to that? Or kind of what was going on there because, again, to see volume up with pricing as strong as it is, is pretty notable?

Kevin Jacobsen : Hi, Lauren, yes, I’m happy to answer the question on households. As you saw, we had 9% growth in the segment. From a volume perspective, really Litter was the star of the group. We had a double-digit growth in that business. And we continue to see very strong category growth. As you know, we’ve talked about it before. Strong pet adoption during the pandemic, that’s continued to fuel that category. And then we’ve continued to see very strong performance in that business. And so we are seeing — in spite of the pricing we’ve taken, we are still growing volume in that business more than offsetting the elasticity impact.

Lauren Lieberman : Okay. Great. And then also just on the pricing, sort of which of you had mentioned that pricing really had very little impact on the second quarter given the timing that went into the market and some of it is still showing up on shelves. So as we think about modeling forward, you spoke to seeing more volume pressure, but should we also see pricing accelerating versus what’s already in the financials in the second quarter?

Kevin Jacobsen : Yes, Lauren, I think you’ll have two impacts. Now we’re starting to lap the first round of pricing we took last year. So you’re starting to see some of that first run of pricing drop off as we get into the back half of our fiscal year, and is being replaced with his fourth round. So it’s not as clean as another round of pricing being added. I think in aggregate, this fourth round was larger than our first round. So in aggregate, you’ll see a little bit more benefit from pricing, and you see a little larger hit in terms of the impact to volume from elasticities.

Lauren Lieberman : Okay. All right. That’s great. And yes. And then just a final question, which would be — thought it was interesting the way the prepared remarks were written about rebuilding household penetration. So knowing that you don’t typically expect a lot of revenue growth when you take pricing and everything is kind of going according to plan, but I was curious what categories kind of warrant that extra attention with — specifically with regard to rebuilding household penetration? And what if anything you can tell us about plans to do that?

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