Clorox FY2026 net sales fell 5% to $6.72B and diluted EPS fell 26% to $4.81, mostly because retailers used up stock they had bought early ahead of its ERP switch. Excluding that, organic sales were about flat, and FY2027 guidance calls for 3.5-4.5% organic growth.
Revenue
$6.7B
-5.4% YoY
Net income
$587M
-27.5% YoY
Diluted EPS
$4.81
-26.2% YoY
Operating margin
13.6%
Overview: a year distorted by its own software switch
Clorox's fiscal 2026 (July 2025 to June 2026) looks worse than the business underneath it, but not by as much as the headline decline suggests. Net sales fell 5% to $6.72 billion and diluted earnings per share (EPS) fell 26% to $4.81. The biggest single cause is a timing effect Clorox created itself. Ahead of switching its U.S. operations to a new ERP system (the enterprise software that runs ordering, shipping and invoicing), retailers stocked up in the fourth quarter of fiscal 2025 so their shelves would not go empty if the changeover went badly. In fiscal 2026 they sold through that extra stock instead of placing new orders.
In its results release (8-K Exhibit 99.1, Aug. 3, 2026), Clorox puts numbers on the effect. The pre-ERP buying added about 3.5 points of sales and about 90 cents of EPS to fiscal 2025. Retailers then working that stock down cost about 7.5 points of sales growth and about 90 cents of EPS in fiscal 2026. Two other big items also landed this year: the $2.15 billion purchase of GOJO Industries (the maker of Purell) on April 1, 2026, and a $476 million cash payment to Procter & Gamble to buy back P&G's 20% stake in the Glad business.
Key figures
Clorox has no discontinued operations, so every figure below covers the whole company. Clorox does not report an "operating income" line. The margin row uses EBIT (earnings before interest and income taxes), which the company defines in its MD&A: pre-tax earnings of $791 million, plus $130 million of interest expense, minus $8 million of interest income, gives $913 million.
Metric
FY2026
FY2025
YoY change
Net sales
$6,720M
$7,104M
-5.4%
Organic sales growth (non-GAAP)
-8%
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Organic sales growth strips out currency moves and the effect of buying or selling businesses, so it shows how the existing brands performed. The EBIT and adjusted EBIT margins are our own calculations from the filing's figures. Adjusted EBIT ($1,030M vs. $1,316M) comes from the company's reconciliation.
Sales: almost all of the decline was lost volume, not price cuts
The 10-K breaks the 5% reported decline into its parts. Volume fell 5%, GOJO and the Better Health divestiture together added 3 points, and currency and price/mix each had roughly zero net effect. On an organic basis, sales fell 8%: organic volume was down 7%, and price/mix took off about another point. Clorox attributes about 7.5 of those 8 points to lapping the ERP-related shipments. Because both figures are rounded, a precise underlying rate can't be backed out, but the arithmetic points to organic sales that were roughly flat, not growing, once the ERP effect is removed. That matters because Clorox's long-term target (its IGNITE strategy) is 3% to 5% annual sales growth.
The 10-K also shows ordinary demand weakness in some places. In Lifestyle, it cites "lower consumption" alongside the ERP effect, and says prices were pulled down by "higher trade promotion spending" (discounts funded through retailers). In Household, it cites "unfavorable mix", meaning a larger share of sales came from cheaper items.
Segments: the U.S. businesses absorbed the whole hit
Segment
Net sales FY26
Net sales FY25
Change
Segment adj. EBIT FY26
FY25
Change
Health and Wellness
$2,697M
$2,697M
0%
$678M
$840M
-19%
Household
$1,787M
$2,001M
-11%
$192M
$325M
-41%
Lifestyle
$1,123M
$1,303M
-14%
$208M
$290M
-28%
International
$1,113M
$1,065M
+5%
$113M
$110M
+3%
Corporate and Other
$0M
$38M
n/m
-$161M
-$249M
+35%
Health and Wellness (Clorox cleaning products, professional products and now Purell) had flat sales only because of GOJO. The acquisition contributed $211 million of sales in its three months under Clorox. Without it, organic sales fell 8%. Segment profit fell 19%, and its margin dropped from 31.1% to 25.1% of sales. The 10-K points to the ERP comparison and to "higher manufacturing and logistics costs".
Household (Glad, Fresh Step and Scoop Away cat litter, Kingsford charcoal) took the steepest profit hit. Segment adjusted EBIT fell 41%, and its margin dropped from 16.2% to 10.7%. Lower sales and higher manufacturing and logistics costs drove the fall, partly offset by cost savings. The release adds that fourth-quarter Household volume was also hurt by third-quarter "shipment ahead of consumption", meaning retailers had again bought more than shoppers were taking home.
Lifestyle (Hidden Valley, Brita, Burt's Bees) had the largest sales decline at 14%. Volume fell 12%, and the extra 2 points came from heavier promotions. Lower advertising only partly cushioned the 28% drop in profit.
International was the only segment that grew. Currency added most of its 5% sales increase (organic growth was 2%), and segment profit rose 3%. The U.S. ERP switch did not affect this segment.
Corporate and Other no longer includes the Better Health vitamins-and-supplements business, which was sold on Sept. 10, 2024 and produced $38 million of sales in fiscal 2025. Its costs also fell, mainly because of lower incentive pay for employees.
Margins: lower volume plus higher factory and freight costs
Gross margin (the share of sales left after the direct cost of making and shipping products) fell 290 basis points to 42.3%. A basis point is one-hundredth of a percentage point. The 10-K blames "lower net sales and higher manufacturing and logistics costs, partially offset by cost savings". The release puts about 100 basis points of the decline on the ERP shipment comparison and about 50 basis points on GOJO deal accounting. Most of that GOJO cost is the "inventory step-up": acquired inventory is booked at market value, so it shows lower margins when it is sold. That leaves roughly 140 basis points of margin decline that neither the ERP timing nor the deal explains.
Clorox trimmed spending below the gross-profit line, but not as fast as sales fell. Selling and administrative expenses fell 5% to $1,066 million, mostly on lower incentive pay. Advertising fell 3% to $749 million. Both rose slightly as a share of sales.
GAAP vs. adjusted EPS: the one-offs mostly cancelled out
GAAP EPS fell 26% and adjusted EPS fell 28%, a smaller gap than the list of one-off items would suggest. Adjusted EPS excludes items that management considers non-recurring, and the two years excluded different things. According to the release's reconciliation:
FY2026 adjustments: $0.36 of GOJO acquisition and integration costs ($58M pre-tax) and $0.36 of costs for the ERP and digital-capabilities program ($59M pre-tax). GAAP $4.81 plus these adjustments gives adjusted $5.53.
FY2025 adjustments: a $0.94 loss on selling Better Health ($118M pre-tax) and $0.68 of ERP program costs, minus a $0.42 net benefit from insurance recoveries related to the August 2023 cyberattack.
Two further GAAP items widened the gap between pre-tax earnings and EPS. Interest expense rose $42 million to $130 million because of borrowing for GOJO. "Other income" fell from $86 million to $8 million as the cyberattack insurance recoveries stopped. The ERP program is now finished: the 10-K says the roughly $580 million, five-year investment was completed in the third quarter of fiscal 2026, so these adjustments should stop.
Divestitures and portfolio changes
Better Health VMS (vitamins, minerals, supplements) was sold in September 2024. That produced the $118 million loss in fiscal 2025, which fiscal 2026 does not repeat and which helps the GAAP comparison.
Argentina was sold in March 2024, in fiscal 2024, with a $240 million pre-tax loss. It is not part of the fiscal 2025/2026 comparison. The 10-K groups it with the Better Health sale and the GOJO purchase as part of reshaping the portfolio "to reduce volatility, accelerate sales growth and structurally improve margins."
GOJO/Purell cost $2,147 million in cash. $717 million of that went to goodwill (the part of a purchase price above the value of identifiable assets) and $1,056 million to trademarks and other intangibles. GOJO added only $6 million of net earnings in its first quarter under Clorox, because deal accounting and integration costs absorb most of its profit early on. Clorox's release says health and hygiene now make up more than half of the company's net sales.
Glad buyout: Clorox paid P&G $476 million in March 2026 for its 20% share of the Glad venture. The payment ran through operating cash flow, which is why reported operating cash flow fell 38% while adjusted free cash flow, which adds the payment back, rose to $881 million (13.1% of sales).
Balance sheet: more debt, a lower rating
The two deals changed the balance sheet. Long-term borrowings rose from $2,484 million to $3,982 million after a $1,500 million bond issue in May 2026. Current liabilities now exceed current assets by $949 million, mainly because of short-term credit maturing within a year. S&P cut Clorox's long-term rating one notch, from BBB+ to BBB. Dividends paid ($602 million) were larger than net earnings attributable to Clorox ($587 million). Even so, Clorox raised its quarterly dividend 1%, to $1.25, in July 2026.
Takeaway: Take out the ERP timing effect and fiscal 2026 still shows a business with flat organic sales and a gross margin down about 140 basis points on higher costs. The 8% organic decline is mostly retailers working through stock they bought early, not shoppers abandoning the brands. But the underlying picture is stagnation, not growth, and Clorox now carries about $1.5 billion more long-term debt to pay for Purell.
Fiscal 2027 outlook
Management's guidance, from the Aug. 3, 2026 release (8-K Exhibit 99.1):
FY2027 guidance item
Range
Net sales growth
+13% to +14% (about 9.5 pts from GOJO)
Organic sales growth
+3.5% to +4.5% (more than 3.5 pts from lapping the ERP drawdown)
Gross margin
about 42%
Diluted EPS (GAAP)
$5.41 to $5.71 (+12% to +19%)
Adjusted EPS
$5.70 to $6.00 (+3% to +8%)
Effective tax rate
about 23%
The guidance repeats the pattern. Almost all of the expected organic growth comes from the easy comparison with fiscal 2026's retailer drawdown. At the midpoint, organic growth is about 4%, and more than 3.5 points of that is the ERP effect reversing. That implies underlying growth of about half a point. Clorox also expects gross margin to fall slightly again, to about 42%, because of "higher-than-normal inflationary headwinds and negative mix". Adjusted EPS growth of 3% to 8% is modest for a year that gets a mechanical boost from lapping the drawdown and a full 12 months of GOJO, compared with three months in fiscal 2026. Part of that gain goes to a full year of interest on the acquisition debt.
The main things to watch in fiscal 2027 are whether Purell's contribution grows faster than its extra interest cost, and whether Household and Lifestyle volumes recover once the ERP effect is gone. Fiscal 2026 does not yet show evidence of either.
Source: The Clorox Company Form 10-K for the fiscal year ended June 30, 2026 (financial statements and MD&A in Exhibit 99.1). Adjusted EPS, the ERP-impact estimates, fourth-quarter detail and fiscal 2027 guidance come from the company's earnings release furnished as Exhibit 99.1 to its Form 8-K dated Aug. 3, 2026.