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

Linda Rendle : Kevin, on the investment spending piece, incredibly important. We’re seeing good consumer and category resilience. We’re happy that we are maintaining share in an environment where we are aggressively going after rebuilding margin. And you all know that’s exactly what we’ve targeted. We want to keep our top line momentum while rebuilding margins at the same time. And that’s how we’re approaching investments. We’re making the right short-term investments to do that, but we’re also not taking our eye off the long term and continuing to invest in those things that are going to make us a stronger company, like our digital transformation and like our op model. So that’s what we’re focused on. It just happens to be the shape of spending to have less in the front half of the year versus the back half given our plans, but that’s just the shape of the investment, and we still are targeting 10% from an advertising and sales promotion perspective, still continuing to invest in innovation that’s been going well for us.

And overall, going to continue to focus that investment on our brands. What I will say, though, is we’re watching our categories incredibly closely right now. And the most important thing that we do is continue to deliver superior value to our consumers. And right now, we’re really happy to say, among all that pricing that we took strong double digits, we’ve maintained our record high superiority rating of 76%. We were in the 50% range a few years ago. And that combination gives us the confidence to continue to invest. But if we see a change in that, where consumers are reacting in a different way or if we don’t see competition follow on price increases, we are ready with backup plans that we can activate very, very quickly to make adjustments to that.

And if we need to make additional investments, we will to support the value spirit of our brands. But we feel we have that balance right, right now. That played out in Q2 behind the good balance we had in top line and bottom line. But that’s how we’re thinking about it overall, and we’ll continue to take a proactive approach of adjusting if we need to.

Kevin Grundy : I appreciate the color. If I could just one very quick follow-up, and I think you kind of touched on this a little bit. Are you starting to hear from retailers at all just given some of the moderation in commodities that they’d like to see more on deal here, more trade promotion because it hasn’t moved up I think looking at the scanner data on a 4, 12-week basis, we haven’t seen it move up a lot. And we know that some of the categories you play in, historically have been heavily promoted categories. I don’t want to assess it as a risk, but is that sort of coming up that some of this pricing you’re going to take you going to have to go back on deal? And then I’ll pass it on.