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

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Javier Escalante : I wanted to double-click on the timing factors and the household volume growth of 3%. If you look at the scan data, it shows a double-digit decline. So if you can help us understand how much stronger pet food, pet litter business was in the quarter and whether there was a channel shift there. And then I have a question more philosophically to Linda when it comes to the health and wellness business?

Kevin Jacobsen : Javier, let me see if I answer your question on shifting. So as we mentioned, in Q2, we had some benefit of shifting of some merchant activity. And as I said, that pretty typical that you’ll see some — events shift between quarters out of Q3 into Q2, and that was across a number of businesses. And then more specifically, we’re seeing the benefit of an early start to cold flu season in Q2 as it relates to our health and wellness portfolio. But maybe say a little bit more on what your questions. I’m not sure that gets to the question you’re answering.

Javier Escalante : No. It’s a little bit more of a follow-up on Lauren’s question when it comes to did the job being household and the categories that you’ve referred to being the shift in was health and wellness, and they were down 19%, at the real jump was in household, and we don’t see that in retail. So if you can help us — if you can give color there and help us understand the disconnect between what we see in retail and what you just reported?

Linda Rendle : Yes, I’ll jump in on that one, Javier. So you are noting a few categories that have very strong untracked channel performance. And particularly in litter, our business in club, that was due to some strong merchandising activity we had and actually some of the shift that we experienced from Q3 into Q2. So that’s what you’re seeing the difference between the track channels and what we’re talking about from a volume and sales performance in household.

Javier Escalante : Very helpful, Linda. And then basically curious, how you go about answering this question with consumer research. You have health and wellness down 19% is lapping down 18% from a year ago volumes. How you see normalization play out? Do you see people cleaning more as they were during the pandemic, cleanliness and if they are cleaning less, how much many other quarters you feel that volumes are going to be down in health and wellness? .

Linda Rendle : Yes. This is a category that certainly has had the biggest swings as consumers change their behavior as we went through the height of the pandemic, and we’re still lapping. We’re still normalizing, given Omicron happened last Q3, and we’re in the process of lapping that right now. What I would say is if you look at this last Q2 versus pre-pandemic, our volumes are still higher. So in aggregate, people are still cleaning more. And certainly, we’re still normalizing consumer behavior. And then we had a very abnormal cold and flu season this year. It happens earlier, it happened in December from a peak perspective, it usually happens in January and February. So there’s a lot of dynamics in play here around normalization.

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