The Current, delivered daily.
Clorox products are there for the most routine of tasks – cleaning the floor, wiping up a spill, doing the laundry.
The brand's place in every day lives means that the company is in a unique place to understand consumers. Diving into the business during its earnings call for the quarter ended June 30, leaders of The Clorox Company offered an encapsulation of recent trends in the economy and consumer behavior, through the eyes of a household name. Here's a look at the highlights:
People are leaving pandemic habits behind.
Demand for cleaning products exploded with the onset of COVID and the variants that followed. Now that's starting to wane. At Clorox, that means sales growth is moderating along with it. Remember when everyone stocked up on wipes? That era is ending. As leaders pointed out, there hasn't been a typical cold and flu season in two years, either. They'll be monitoring consumer demand as fall brings that dynamic into the mix, as well.
One question going forward: Did the pandemic cleaning routines change behavior for the long haul?
"We're still seeing people care about cleaning and disinfecting elevated, but definitely lower than it was at the height of the pandemic, but higher than it was pre-COVID," CEO Linda Rendle said. "So what we're trying to gauge is when does that new consumption pattern align to that desire from consumers who have a heightened state of awareness of cleaning and disinfecting and get into a more normalized routine."
Inflation is driving up costs for companies.
Rendle gave the state of play at the outset of the call: 2022 is bringing "a very challenging operating environment." Fuel, transportation and raw material costs are challenging companies. Clorox expects to incur $400 million in costs as a result of supply chain expenses and other cost inflation. And this comes after it ended some third-party contracts to save money. But it does see commodity prices starting to come back down in future months, further into 2023.
Consumer prices are going up, too...
Clorox has raised prices three times in recent months. Its most recent and largest hike was in July. It's too early to see the results of that yet, but it is watching the response closely. Changes to packaging size could follow to adjust as people look to save money.
Will it bring a shift to store brands?
Will consumers trade name brands for store brands to save money? That's a big question right now in retail. Clorox is not seeing this happen with its brands when it comes to switching for private label. Rather, customers are opting for different sizes to get better prices.
"They still want the branded player but they...don't have a lot of out of pocket and so they're buying a smaller size," Rendle said. "We're also seeing consumers trade up to larger sizes to get the very best price per ounce. And we're working with retailers to ensure our assortment is right to capture that. We've seen that in other times of inflation and recession and so we've been proactive about addressing that with our retailer partners to ensure that we have the right distribution."
There's more uncertainty ahead.
Sometimes, the way the numbers are presented says a lot. The company's outlook for 2023 offered a wider range than usual, reflecting a market of "heightened volatility." This time of swings is going to continue, but the company is trying to preserve and build back margins in the meantime. It's rolling out a new operational structure for efficiency, for one. Pricing and supply chain changes are in that mix, as well.
"We're pulling every lever available to us," said CFO Kevin Jacobsen.
Trending in Economy
On the Move has the latest from Amazon, Lovesac and more.
This week, leadership is changing at GameStop, Sorel and Beautycounter. Meanwhile, key executives are departing at Amazon, Wayfair and Lovesac.
Here’s a look at the latest shuffles:
GameStop CEO fired
GameStop announced the termination of Matthew Furlong as CEO on Wednesday. A brief statement did not provide a reason for the firing.
With the move, Chewy founder and activist investor Ryan Cohen was named executive chairman of the video game retailer. Cohen will be responsible for capital allocation and overseeing management.
It came as the company reported a 10% year-over-year decline in net sales for the first quarter. Meanwhile, the company’s net loss improved by 62%.
In an SEC filing, GameStop further added this “We believe the combination of these efforts to stabilize and optimize our core business and achieve sustained profitability while also focusing on capital allocation under Mr. Cohen’s leadership will further unlock long-term value creation for our stockholders.”
Cohen was revealed as GameStop's largest shareholder when he disclosed a 10% stake in the retailer in 2020. GameStop went on to become a leading name in the meme stock rise of 2021.
Sorel president steps down
Mark Nenow is stepping down as president of the Sorel brand in order to focus on his health.
After rising to the role in 2015, Nenow spearheaded a transformation of Columbia Sportswear-owned Sorel from a men’s workwear brand to a fashion-focused brand that led with a women’s offering of boots, sandals and sneakers.
“Mark led the brand to sales of $347 million in net sales in 2022,” said Columbia Sportswear CEO Tim Boyle, in a statement. “His leadership has been invaluable to this company, and we wish him the very best.”
Columbia will conduct a search for Nenow’s replacement. Craig Zanon, the company’s SVP of emerging brands, will lead Sorel in the interim.
Beautycounter appoints interim CEO
Beautycounter appointed board member Mindy Mackenzie as interim CEO, succeeding Marc Rey. According to the brand, Rey and the board “mutually decided to transition to a new phase of leadership for Beautycounter.”
McKenzie, a former executive at Carlyle, McKinsey and Jim Beam, will lead the company as it conducts a search for a permanent CEO. Additionally, former Natura & Co CEO Roberto Marques will join Beautycounter’s board as chair.
As part of the transition, Nicole Malozi is also joining the company as chief financial officer. She brings experience from Tatcha, Nike, and DFS Group Limited.
Amazon’s North America fulfillment chief departs
Melissa Nick, a VP of customer fulfillment for North America at Amazon, will leave the company, effective June 16, CNBC reported. Nick joined the company in 2014, and oversaw a region that included nearly 300 fulfillment centers. After doubling its supply chain footprint during the pandemic, Amazon recently reorganized its fulfillment operations to take a regional approach, as opposed to a national model that often resulted in items shipping across the country.
Wayfair’s chief commercial officer to retire
Jon Blotner (Courtesy photo)
Steve Oblak will retire from the role of chief commercial officer at home goods marketplace Wayfair. With the move, Jon Blotner will be promoted to chief commercial officer.
"Steve has served as a critical part of our leadership team and played a pivotal role in Wayfair's growth, helping us grow from a $250 million business when he joined to $12 billion in net revenue today,” said Wayfair CEO Niraj Shah, in a statement. “He oversaw countless milestones, from helping to launch the Wayfair brand as we brought together hundreds of sites into a single platform, to launching new categories, business lines, and geographies while overseeing our North American and European businesses, to leading our debut into physical retail.”
Blotner previously oversaw exclusive and specialty retail brands, as well as digital media at Wayfair. Before joining the company, he served as president of Gemvara.com prior to its 2016 acquisition by Berkshire Hathaway.
Lovesac announces CFO transition
Furniture retailer Lovesac said Donna Dellomo will retire as EVP and CFO, and move to an advisory role, effective June 30. Dellomo was with Lovesac for six years.
Keith Siegner was appointed as the next EVP and CFO. He brings experience as CFO of esports company Vindex, as well as executive roles at Yum! Brands, UBS Securities and Credit Suisse.
Additionally, Jack Krause will retire from the role of chief strategy officer, effective June 30. His responsibilities will be divided between CEO Shawn Nelson and president Mary Fox.
“Since joining Lovesac, Jack has played an instrumental role in transforming the Company into a true omni channel retailer by helping expand our physical touchpoints and digital platform as we continue to disrupt the industry,” said Nelson, in a statement.
NRF adds board members
The National Retail Federation announced the addition of five new board members. They include:
- Marguerite Adzick, founder and CEO, Addison Bay
- Harley Finkelstein, president, Shopify
- Ian Kahn, partner, PwC
- Sharon Leite, CEO, Ideal Image
- Carrie Tharp, VP, strategic industries, Google Cloud