Please note also that our earnings release and prepared remarks are available on our website at thecloroxcompany.com. During this call, we may make forward-looking statements, including about our fiscal year 2026 outlook. Our Q4 and fiscal year 2025 performance was mixed, with weaker than expected top-line growth balanced by strong margin and earnings performance for the year. We also lapped abnormally high demand creation activities from last Q4 as we continue to rebuild shares following supply restoration from our August 2023 cyberattack.
In this environment, we see opportunity ahead as consumers continue to seek better experiences and we will lean into this with our innovation pipeline in the back half of the year. A bit weaker than what we can see in the data, and kind of a bit below what you contemplated in the guidance a few months back. If you look at our organic sales growth, it was about 8%, and if you back out the 13%-14% related to the retailer inventory build, you get, call it about -5%. Remember at our last earnings, we had estimated that excluding the impact of the ERP, we were expecting to be maybe -3%.
The gap is the inventory destocking that we had mentioned in our last earnings, -3% consumption is lower. Although we lost share in Q4, we grew share for the year and we came off of a quarter in Q3 where we maintained share. That will support not only category growth, which we care first and foremost about, but also we believe market share improvements. There is a period of time you can't take orders, and then you have to bring the system back on.
| Metric | Period | Current guidance |
|---|---|---|
| Organic sales growth (reported FY2026) | FY2026 | 7%-8% (including ERP cycling) |
| Organic sales growth (ex-ERP) | FY2026 | -1% to +2% |
| Gross margin (ex-ERP) | FY2026 | flat to +50 bps |
| Adjusted EPS growth (reported) | FY2026 | 22%-25% |
| Adjusted EPS growth (ex-ERP) | FY2026 | 2%-4% |
| Tariff cost headwind | FY2026 | about $40 million |
| Supply chain / commodity inflation headwind | FY2026 | $80 million-$90 million |
| ERP shipment timing impact on sales | Q1 FY2026 | about -14% to -15% |
| Metric | YoY | Note |
|---|---|---|
| Organic sales growth (reported) | about +8% | Driven by roughly 13%-14% from the retailer inventory build ahead of the ERP launch; underlying ex-ERP was about -5%. |
| Consumption | about -3% | Categories slightly negative plus a lower-than-anticipated share performance. |
| Price mix | about -4% | Included a one-time trade spending accrual adjustment; underlying about -2%. |
| Household price mix | about -6% | Lapping significant merchandising events in the prior period added about two points of drag for the segment. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| ERP transition | Expected one to one-and-a-half weeks of retailer inventory build (about 2-3 points of annual growth) | Retailers ordered more than committed, shipping about two weeks of inventory worth 3.5-4 points; now in stabilization/ramp-up phase | Intensifying |
| Consumer environment | Stabilized in Q4 but not yet normalized | Consumers under stress, uncertain, value-seeking, trading to smaller sizes and different retailers | Pressured |
| Promotional environment | — | Largely rational in aggregate, with deep discounting pockets in trash and Cat litter expected to continue into FY2026 | Stable with pockets of intensity |
| Back-half innovation | Built on existing platforms in FY2025 due to cyberattack | Launching new innovation platforms in the back half of FY2026 to drive category and share | Ramping |
| Glad JV with P&G | Paying P&G about 20% of cash flow quarterly through COGS | Exiting the agreement in January, repurchasing P&G's 20% interest, worth about 50 bps of gross margin (20-25 bps in FY2026) | Improving margin |