Economy
04 August 2022
5 ways Clorox explains the economy
A Q2 earnings call showed how the household name is navigating inflation and consumer shifts.

Photo by Clay Banks on Unsplash
A Q2 earnings call showed how the household name is navigating inflation and consumer shifts.
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:
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."
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.
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 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."
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.
Amazon cut another 18,000 jobs in late 2022.
Amazon is set to undergo a second round of layoffs in the coming weeks, bringing the total number of employees let go over the last six months to 27,000.
The latest round of cuts will reduce the number of roles at the company by 9,000.
The layoffs will zero in on several of the fast-growing, high-margin divisions that grew to become forces in their industry verticals after Amazon built them out to provide services for its ecommerce platform. Affected areas will include advertising, the cloud computing division AWS, the streaming platform Twitch and people ops division People Experience and Technology (PXT). Amazon did not break down the number of layoffs in each division.
In advertising, the cuts come in a division that has become a success story for the company. Amazon revealed a $31 billion advertising business in early 2022, meaning the division was larger than the advertising arms of media giants like YouTube on its own. In the fourth quarter of 2022, Amazon posted 19% growth in advertising as the business reached $11.6 billion in revenue.
While the ecommerce division, known internally as Stores, was not exposed in this round, it marks the second time that PXT will face cuts.
In a company memo, CEO Andy Jassy wrote that the additional layoffs follow the conclusion of Amazon’s annual planning process. The goal of this process, Jassy said, was “to be leaner while doing so in a way that enables us to still invest robustly in the key long-term customer experiences.”
“For several years leading up to this one, most of our businesses added a significant amount of headcount,” Jassy wrote. “This made sense given what was happening in our businesses and the economy as a whole. However, given the uncertain economy in which we reside, and the uncertainty that exists in the near future, we have chosen to be more streamlined in our costs and headcount.”
Jassy added that the additional round of cuts is expected to be completed by mid-to-late April. While companies often seek to avoid multiple rounds of layoffs in a short period of time, Jassy said the multipart process was a result of the planning calendar.
“Some may ask why we didn’t announce these role reductions with the ones we announced a couple months ago,” Jassy wrote. “The short answer is that not all of the teams were done with their analyses in the late fall; and rather than rush through these assessments without the appropriate diligence, we chose to share these decisions as we’ve made them so people had the information as soon as possible.”
Alongside the job cuts, Amazon has also scaled back on many expansion projects. Most recently, the company said it will close eight of its cashierless, in-person Amazon Go convenience stores.
While tech layoffs were a top story of late 2022, the cuts are continuing into 2023 as ecommerce faces continued headwinds on discretionary spending from inflation, and investors continue to turn cautious in an atmosphere of interest rate hikes and falling post-pandemic stock prices.
Among major companies in ecommerce, Facebook parent Meta said last week that it will lay off an additional 10,000 workers beyond the previously announced reduction of 11,000 workers in 2022, as CEO Mark Zuckerberg dubbed 2023 the “year of efficiency.” Meanwhile, SMS and email marketing automation platform Klaviyo laid off 140 people across all divisions last week, TechCrunch reported.
The cuts come after tech companies saw their fortunes soar during the pandemic, leading to a hiring frenzy.
Yet tech is proving to be an anomaly in the current economy. The labor market as a whole hasn’t cooled off coming out of the pandemic. U.S. companies, including retailers, continue to add jobs at a sizable clip, and unemployment remains at historic lows.