Clorox(CLX)2022-09-08 11:19Clorox Company Conference Call Summary Company Overview - Company: The Clorox Company (NYSE: CLX) - Event: 2022 Barclays Global Consumer Staples Conference - Date: September 07, 2022 - Participants: - Linda Rendle - CEO - Kevin Jacobsen - CFO Key Points Industry Context and Operating Model - The company is operating in a challenging environment and is taking actions to grow margins and maintain top-line momentum [3] - A new streamlined operating model was announced, aiming for cost savings of 100 million, with benefits expected to begin in the latter half of fiscal year 2023 and continue into fiscal year 2024 [3][12] Digital Transformation - A $500 million investment in digital transformation, including a new ERP system, is underway to modernize capabilities and support long-term growth [5][6] - The ERP system is over 20 years old and is being replaced to improve internal visibility and efficiency [6][8] Margin Recovery and Cost Management - The company aims to rebuild gross margins to pre-pandemic levels of approximately 44%, having lost about 800 basis points during the pandemic [17] - Expected margin improvement of about 200 basis points for the current year, despite facing 550 basis points of cost inflation [17] - The company is focused on pricing actions, cost savings, and optimizing the supply chain to support margin recovery [17][39] Retailer Relationships and Pricing Strategy - Discussions with retailers about pricing are becoming more nuanced due to consumer pressure and inflation [19][20] - The company expects to implement additional pricing plans in the back half of the year to cover inflation and improve margins [36][39] Inventory Management - Inventory levels are about 50% higher than pre-pandemic levels, but the company has started to reduce inventory, aiming for a return to more normalized levels [23][24] - The company has seen improvements in supply chain stability, allowing for better inventory management [24] Innovation and Brand Investment - Clorox has launched innovations in 28 categories in the last fiscal year, with a focus on maintaining advertising and innovation spending [6][14] - The company is committed to investing in its brands to ensure long-term growth and consumer relevance [14][27] International Growth - The company sees international markets as a growth opportunity, with plans to expand beyond Latin America into more stable markets [44] - Recent efforts have doubled the distribution in several countries, contributing positively to organic sales growth [44] Overall Performance and Future Outlook - The company has averaged 5% growth over the last three years, with strong performance in various segments despite challenges in the cleaning category [29][41] - Clorox is focused on balancing short-term tactical execution with long-term strategic goals to ensure sustainable growth [27][30] Additional Insights - The company acknowledges the need for continuous adaptation in response to market dynamics and consumer behavior changes post-pandemic [32] - Clorox is committed to maintaining a strong relationship with retailers while navigating the complexities of pricing and inventory management [19][20]