Please note 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 2026 outlook. Gross margin also came in below expectations, driven by higher than expected supply chain costs and delayed cost savings as we deliberately prioritized stabilizing the ERP. Food, we returned to share growth this quarter, so lots of things going well, and where momentum continues.
I guess I know we'll get 2027 guidance in August, but there's just a lot of moving pieces here with the $0.90 GLP-1s and now this inflationary pressure. This is obviously material, because it's in Q4, we didn't have, you know, time yet to deploy any of the mitigation actions. We have a steady track record over the last few years, if anything, we've developed a really robust set of tools around integrated margin management. As you probably saw in Q4, we are recognizing a large one-time cost, and this is in our gross margin.
That's a headwind of 50 basis points, but that's going to allow us to actually accelerate one of those more structural cost savings. Of course, it will differ by BUs, depending on the competitive dynamic, as well as the pipeline that was already existing. Did that change as you point now to, like, you know, the impact that I think, if I understood it correctly, Luc, you mentioned 30 basis points gross margin headwind. How does that change for GOJO's when you gave guidance at the time wasn't when, you know, we saw oil prices at these levels?
| Metric | Period | Current guidance |
|---|---|---|
| Full-year gross margin | FY2026 | down 250-300 bps (worse by about 150-200 bps) |
| Oil price assumption (Q4 midpoint) | Q4 FY2026 | about $100 per barrel (about $20-$25 million / 130 bps headwind) |
| Category growth assumption | FY2026 | 0%-1% (unchanged) |
| GOJO contribution to sales | Q4 FY2026 | about $200 million (about +10% in Q4, +3% full year) |
| GOJO gross margin dilution | Year 1 | about 50 bps ongoing (plus 150 bps one-time inventory step-up in Q4) |
| Incremental interest expense from GOJO | Q4 FY2026 | about +$30 million in Q4 (about +$110 million next year) |
| One-time cost-saving acceleration charge | Q4 FY2026 | about 50 bps gross margin headwind |
| Metric | YoY | Note |
|---|---|---|
| Total company U.S. Retail shipment vs consumption | about -1 point of negative timing | Health and wellness reversal from a Q2 prebuild offset against household early shipments and lifestyle retailer inventory adjustments. |
| Total Distribution Points | up over 5% | Shelf-space gains across the portfolio in line with plan, though some items not yet in the right shelf locations. |
| Food category | closer to mid-single-digit decline | High promotional intensity and deep competitor discounting plus GLP-1 consumer trends; company still grew share. |
| Trash category | up over 2 points | Strong category with Glad share sequentially improving on sharper price points and better innovation. |
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| ERP transition | Stabilizing after completing the January manufacturing phase | Implementation complete across all three rounds; service levels stabilized late in Q3 with minimal incremental cost expected in Q4, moving into the optimization phase | Completing |
| Input cost inflation | Moderate inflation expected, manageable over time | New Middle East oil-price headwind hitting Q4 by about 130 bps; too early to size FY2027 | Intensifying |
| Litter relaunch | Full multi-year relaunch beginning with encouraging early results | Bumpier and slower than expected with shelf placement gaps and hard-conversion out-of-stocks; a multi-year effort still being fixed | Behind plan |
| GOJO/Purell acquisition | Planned acquisition announced | Closed April 1; integration underway, management retained, $800 million business, EBITDA-neutral year one, at least $50 million run-rate synergies over time | Integrating |
| Net revenue management / pricing | Selective disciplined price investments such as Glad | RGM live in market (Glad price-down grew share); evaluating targeted FY2027 pricing with discipline given a stressed consumer | Expanding |