Clorox has seen 500% increases in demand during the COVID-19 pandemic: CEO

Clorox chairman and CEO Benno Dorer is working nearly around the clock, fitting in a meal or two, squeezing in some family time, getting a wee bit of rest and then rinse and repeating that routine.

Suffice it to say, it’s very busy days at 107-year-old bleach and disinfecting wipe maker Clorox as the world continues to battle through the COVID-19 pandemic.

For Clorox, that has meant enduring through insane levels of demand by shoppers for bleach (have to wash those cloth face masks), disinfecting wipes (have to wipe down the counters 25 times a day), Fresh Step cat litter (can’t keep running out for the stuff during stay-at-home orders, and cats have to use the bathroom too during a pandemic) and Hidden Valley salad dressings (yes, Clorox owns that Hidden Valley dressing you have used on some kind of packaged food of late).

Even with factories cranking at full speed and Clorox investing in new capacity, Dorer concedes in an interview with Yahoo Finance that consumer demand continues to outstrip supply. That situation may not stabilize until the summer, Dorer suggests, as households settle into their new disinfecting routines and more steadily buy cleaning products instead of the panic hoarding seen in March and into April at Walmart, Target and on Amazon.

“So if you go to stores, we’re shipping to our stores every single day. But what we’re shipping is pretty much scooped up right away. So it’s gone after a few minutes,” Dorer explains. “Clearly there’s an unprecedented demand spike for some of our products, in particular wipes. We’ve seen spikes of up to 500% in terms of demand and no supply chain in our industry is built to satisfy that demand increase in a short period of time.”

Dorer adds, “We have significantly increased our production we’ve done so by simplifying our lineup, which allows our lines to run faster, turning out 40% more products last quarter than we did in the previous year’s quarter. We’re activating third-party suppliers who produce for us to help us. And we’re investing in further capacity. So we continue to find new ways to speed up our lines and find capacity. And we think that there’s going to be substantial improvement this summer. It’s going to be touch and go until then, unfortunately, but help is on the way and I think should ease up in the next few months.”

Clorox brand products line the shelf of a supermarket in the East Village neighborhood of New York. (AP Photo/Mary Altaffer, File)

Clorox’s latest financials underscore the new reality it’s navigating. It’s a reality highlighted by consumers paying more attention to personal hygiene and cleanliness standards at home — and using Clorox’s disinfecting products (and yes, those from the likes of P&G, etc.) to do so. It’s a reality where businesses are opening their wallets big-time to disinfect offices to support the return of workers…and ultimately keep them safe and COVID-19 free hopefully for months.

Fiscal third quarter sales exploded 15% from the prior year. Volume surged 18%. Organic sales blew up 17%. Earnings soared 31%. Sales and pre-tax earnings in Clorox’s important cleaning segment increased an impressive 32% and 71%, respectively. These are growth rates that would have been unimaginable at this point last year — but may become the new medium-term norm at a Clorox settling into a post health pandemic world.

For its full fiscal year that ends in June, Clorox sees organic sales growth of 6% to 8%. Earnings are expected to be up 6% to 9%. The probability is high Clorox outlines double-digit growth for sales and earnings for its new fiscal year when it reports earnings again sometime in early August.

Clorox shares have reflected the new world it lives in — the stock is up 30% this year versus the 13% drop for the S&P 500. P&G shares are down 7% year-to-date, whereas Church & Dwight is up only 2%.

JPMorgan analyst Andrea Teixeira believes Clorox will play an “integral” role in fighting off COVID-19 and remains bullish on the stock.

On May 3, Clorox celebrated its 107th birthday. Dorer says the mission of the company is the same today as it was back then — serve the public.

“We have a proud history started by making disinfecting products available to the broad public in service of public health. And never has that mission been clear than it is today,” Dorer points out.

So true indeed.

Brian Sozzi is an editor-at-large and co-anchor of The First Trade at Yahoo Finance. Follow Sozzi on Twitter @BrianSozzi and on LinkedIn.

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