Clorox(US: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 $75 million to $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]