Clorox Sales and Earnings Plunge Amid VMS Divestiture, Glad Venture Nears End

TL;DR

**Clorox is bleeding cash and earnings, and the Glad venture termination is a $476M headache they don't need right now – short it.**

AI Summary

The Clorox Company reported a significant decline in net sales and net earnings for the three months ended September 30, 2025, with net sales decreasing by 18.9% to $1,429 million from $1,762 million in the prior year. Net earnings attributable to Clorox fell by 19.2% to $80 million from $99 million. Basic net earnings per share also dropped to $0.65 from $0.80. This decline was partly influenced by the divestiture of the Better Health VMS business in September 2024, which contributed $38 million in net sales in the prior period. The company's gross profit decreased by 26.1% to $596 million from $807 million. A key strategic change is the impending termination of the Glad bags and wraps venture agreement with Procter & Gamble in January 2026, requiring Clorox to purchase P&G's 20% interest for an estimated fair value of $476 million. The company also saw an increase in notes and loans payable to $218 million from $4 million, indicating increased short-term borrowing. Inventories, net, increased to $577 million from $523 million, while cash provided by operations decreased significantly to $93 million from $221 million.

Why It Matters

This filing reveals a challenging quarter for Clorox, with substantial declines in both top and bottom lines, which could signal headwinds for investors. The termination of the Glad venture with P&G in January 2026, requiring a $476 million cash outlay, represents a significant strategic shift and a potential liquidity drain, impacting future earnings and competitive positioning in the household products market. Employees of the Glad business may face uncertainty regarding the transition. For customers, the change in ownership of the Glad brand could lead to shifts in product development or marketing. The broader market will watch how Clorox manages this transition and its impact on its competitive standing against rivals like SC Johnson and Reynolds Consumer Products.

Risk Assessment

Risk Level: high — The risk level is high due to a significant 18.9% decline in net sales and a 19.2% drop in net earnings attributable to Clorox. Furthermore, net cash provided by operations plummeted by 58% from $221 million to $93 million, and notes and loans payable surged from $4 million to $218 million, indicating increased reliance on debt. The upcoming $476 million cash payment for the Glad venture termination adds substantial financial pressure.

Analyst Insight

Investors should consider reducing their exposure to CLX given the sharp decline in financial performance and the significant cash outflow required for the Glad venture termination. Monitor the company's liquidity and debt levels closely in subsequent quarters, especially how they finance the P&G buyout and manage inventory increases.

Financial Highlights

debt To Equity

N/A

revenue

$1,429M

operating Margin

N/A

total Assets

$5,528M

total Debt

$2,703M

net Income

$80M

eps

$0.65

gross Margin

41.7%

cash Position

$166M

revenue Growth

-18.9%

Revenue Breakdown

Key Numbers

• $1.429B — Net Sales (Decreased 18.9% from $1.762B in prior year)
• $80M — Net Earnings Attributable to Clorox (Decreased 19.2% from $99M in prior year)
• $0.65 — Diluted Net Earnings Per Share (Decreased from $0.80 in prior year)
• $476M — Estimated Fair Value of P&G's Glad Interest (Required cash purchase upon venture termination in January 2026)
• $214M — Net Notes and Loans Payable (Increased from $0 in prior year, indicating increased borrowing)
• $93M — Net Cash Provided by Operations (Decreased significantly from $221M in prior year)
• $577M — Inventories, net (Increased from $523M as of June 30, 2025)
• $118M — Loss on Divestiture (After-tax loss recorded in Q1 2025 from Better Health VMS business)
• 121,980,379 — Shares Outstanding (As of October 20, 2025)
• $179M — SCF Program Amount Due (Amount due to suppliers participating in Supply Chain Financing program as of September 30, 2025)

Key Players & Entities

• The Clorox Company (company) — registrant
• Procter & Gamble Company (company) — venture partner for Glad business
• $1,429 million (dollar_amount) — net sales for Q1 2026
• $1,762 million (dollar_amount) — net sales for Q1 2025
• $80 million (dollar_amount) — net earnings attributable to Clorox for Q1 2026
• $99 million (dollar_amount) — net earnings attributable to Clorox for Q1 2025
• $0.65 (dollar_amount) — basic net earnings per share for Q1 2026
• $0.80 (dollar_amount) — basic net earnings per share for Q1 2025
• $476 million (dollar_amount) — estimated fair value of P&G's interest in Glad venture
• $218 million (dollar_amount) — notes and loans payable as of September 30, 2025

FAQ

Risk Factors

• Increased Borrowing and Debt Obligations [high — financial]: The company's notes and loans payable increased significantly to $218 million from $4 million. This indicates a reliance on short-term borrowing, potentially increasing financial risk if not managed effectively. The upcoming purchase of P&G's 20% interest in the Glad venture for an estimated $476 million will further strain cash resources.
• Inventory Management Challenges [medium — operational]: Inventories, net, increased to $577 million from $523 million. This rise, coupled with a significant decrease in cash provided by operations ($93 million from $221 million), suggests potential inefficiencies in inventory turnover or a buildup of unsold goods, which can tie up capital and increase holding costs.
• Glad Venture Termination [high — market]: The impending termination of the Glad bags and wraps venture agreement with Procter & Gamble in January 2026 requires Clorox to purchase P&G's 20% interest for an estimated $476 million. This significant cash outflow could impact liquidity and future strategic investments.
• Divestiture Impact on Sales [medium — operational]: The divestiture of the Better Health VMS business in September 2024 resulted in a $38 million reduction in net sales for the current period compared to the prior year. The company also recorded an after-tax loss of $118 million on this divestiture in Q1 2025.
• Decreased Profitability and Cash Flow [high — financial]: Net sales decreased by 18.9% to $1,429 million and net earnings attributable to Clorox fell by 19.2% to $80 million. Gross profit declined by 26.1% to $596 million. Cash provided by operations dropped significantly to $93 million from $221 million, indicating a weaker ability to generate cash from core business activities.

Industry Context

The consumer staples industry, where Clorox operates, is characterized by established brands and intense competition. Companies like Clorox rely on brand loyalty, efficient supply chains, and innovation to maintain market share. Recent trends include increased consumer focus on health and wellness, as well as sustainability, influencing product development and marketing strategies.

Regulatory Implications

Clorox operates under various consumer protection regulations related to product safety, labeling, and advertising. Changes in environmental regulations or international trade policies could also impact manufacturing costs and market access. The company's financial reporting is subject to SEC oversight and accounting standards.

What Investors Should Do

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Key Dates

• 2026-01-01: Termination of Glad bags and wraps venture agreement with Procter & Gamble — Clorox will be required to purchase P&G's 20% interest for an estimated $476 million, impacting cash flow and ownership structure.
• 2025-09-30: End of Q1 Fiscal Year 2026 — Reporting period for the 10-Q, showing significant declines in sales, earnings, and cash flow from operations.
• 2024-09-30: End of Q1 Fiscal Year 2025 — Prior year comparable period, showing higher sales, earnings, and cash flow from operations, including results from the divested Better Health VMS business.
• 2024-09-30: Divestiture of Better Health VMS business completed — Impacted current period sales negatively by $38 million and resulted in an $118 million after-tax loss recorded in Q1 2025.

Glossary

Loss on divestiture

The financial loss incurred when selling off a business unit or asset. This is an after-tax amount. (A $118 million after-tax loss was recorded in Q1 2025 related to the divestiture of the Better Health VMS business, impacting net earnings.)

Notes and loans payable

Short-term debt obligations that a company owes to lenders. (Increased significantly to $218 million from $4 million, indicating increased reliance on short-term borrowing.)

Inventories, net

The value of raw materials, work-in-progress, and finished goods held by the company, net of any allowances for obsolescence. (Increased to $577 million from $523 million, potentially indicating slower sales or strategic inventory buildup.)

Cash provided by operations

The net amount of cash generated from a company's normal business operations over a period. (Decreased significantly to $93 million from $221 million, signaling a weaker ability to generate cash from core activities.)

Venture agreement

A contract between two or more parties to undertake a specific business project or venture, sharing risks and rewards. (The termination of the Glad bags and wraps venture agreement with P&G necessitates a significant cash purchase by Clorox.)

Noncontrolling interests

The portion of equity in a subsidiary that is not attributable to the parent company. (Net earnings attributable to noncontrolling interests were $2 million for the three months ended September 30, 2025, and $4 million for the prior year.)

Year-Over-Year Comparison

Compared to the prior year's comparable period, Clorox has experienced a significant downturn. Net sales have fallen by 18.9% to $1,429 million, and net earnings attributable to Clorox have decreased by 19.2% to $80 million. Gross profit has seen a substantial decline of 26.1%. Furthermore, cash provided by operations has more than halved, dropping from $221 million to $93 million, indicating a weakening operational cash generation capability. The prior year also benefited from the inclusion of the divested Better Health VMS business, which is now absent.

Key Financial Figures

• $1.00 — nge on which registered Common Stock - $1.00 par value CLX New York Stock Exchange

Filing Documents

• clx-20250930.htm (10-Q) — 1042KB
• clxq1fy26ex101clx2025rsufo.htm (EX-10.1) — 71KB
• clxq1fy26ex102clx2025rsufo.htm (EX-10.2) — 69KB
• clxq1fy26ex103clx2025psufo.htm (EX-10.3) — 98KB
• clxq1fy26ex311ceocertifica.htm (EX-31.1) — 8KB
• clxq1fy26ex312cfocertifica.htm (EX-31.2) — 9KB
• clxq1fy26ex32ceocfocertifi.htm (EX-32) — 5KB
• clx-20250930_g1.jpg (GRAPHIC) — 15KB
• 0000021076-25-000053.txt ( ) — 6515KB
• clx-20250930.xsd (EX-101.SCH) — 32KB
• clx-20250930_cal.xml (EX-101.CAL) — 71KB
• clx-20250930_def.xml (EX-101.DEF) — 148KB
• clx-20250930_lab.xml (EX-101.LAB) — 498KB
• clx-20250930_pre.xml (EX-101.PRE) — 321KB
• clx-20250930_htm.xml (XML) — 1111KB

- FINANCIAL INFORMATION

PART I - FINANCIAL INFORMATION 3

Financial Statements

Item 1. Financial Statements 3 Condensed Consolidated Statements of Earnings 3 Condensed Consolidated Statements of Comprehensive Income 4 Condensed Consolidated Balance Sheets 5 Condensed Consolidated Statements of Cash Flows 6 Notes to Condensed Consolidated Financial Statements 7

Management's Discussion and Analysis of Financial Condition and Results of Operations

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 19

Quantitative and Qualitative Disclosures About Market Risk

Item 3. Quantitative and Qualitative Disclosures About Market Risk 31

Controls and Procedures

Item 4. Controls and Procedures 31

- OTHER INFORMATION

PART II - OTHER INFORMATION 32

A. Risk Factors

Item 1.A. Risk Factors 32

Unregistered Sales of Equity Securities and Use of Proceeds

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 32

Other Information

Item 5. Other Information 32

Exhibits

Item 6. Exhibits 33 2

– FINANCIAL INFORMATION

PART I – FINANCIAL INFORMATION

Financial Statements

Item 1. Financial Statements The Clorox Company Condensed Consolidated Statements of Earnings (Unaudited) (Dollars in millions, except per share data) Three months ended 9/30/2025 9/30/2024 Net sales $ 1,429 $ 1,762 Cost of products sold 833 955 Gross profit 596 807 Selling and administrative expenses 277 281 Advertising costs 166 201 Research and development costs 28 31 Loss on divestiture — 118 Interest expense 23 21 Other (income) expense, net ( 5 ) ( 22 ) Earnings before income taxes 107 177 Income tax expense 25 74 Net earnings 82 103 Less: Net earnings attributable to noncontrolling interests 2 4 Net earnings attributable to Clorox $ 80 $ 99 Net earnings per share attributable to Clorox Basic net earnings per share $ 0.65 $ 0.80 Diluted net earnings per share $ 0.65 $ 0.80 Weighted average shares outstanding (in thousands) Basic 122,629 123,795 Diluted 123,018 124,677 See Notes to Condensed Consolidated Financial Statements (Unaudited) 3 The Clorox Company Condensed Consolidated Statements of Comprehensive Income (Unaudited) (Dollars in millions) Three months ended 9/30/2025 9/30/2024 Net earnings $ 82 $ 103 Other comprehensive income (loss), net of tax: Foreign currency translation adjustments ( 4 ) 14 Net unrealized gains (losses) on derivatives ( 4 ) ( 6 ) Total other comprehensive (loss) income, net of tax ( 8 ) 8 Comprehensive income 74 111 Less: Total comprehensive income attributable to noncontrolling interests 2 4 Total comprehensive income attributable to Clorox $ 72 $ 107 See Notes to Condensed Consolidated Financial Statements (Unaudited) 4 The Clorox Company Condensed Consolidated Balance Sheets (Dollars in millions, except per share data) 9/30/2025 6/30/2025 (Unaudited) ASSETS Current assets Cash and cash equivalents $ 166 $ 167 Receivables, net 703 821 Inventories, net 577 523 Prepaid expenses and other current assets 249 97 Total current assets 1,695 1,608 Property, plant