Clorox (NYSE:CLX) reported mixed financial results for fiscal year 2025, with organic sales falling short of expectations when adjusting for one-time shipment timing, while gross margin and earnings showed notable improvement. Fourth-quarter sales were temporarily lifted by a large retailer inventory build associated with the company’s ERP implementation, which added approximately 3.5%–4% to full-year results. For fiscal 2026, Clorox expects modest organic growth of –1% to +2%, continued gross margin expansion of up to 50 basis points, and adjusted EPS growth in the range of 2%–4%, excluding transitory effects.

Underpinning the company’s operational and financial trajectory is a multi-year digital transformation centered around a complete ERP system rebuild and the growing integration of artificial intelligence across its enterprise functions.

The technology overhaul is designed to modernize execution, unlock real-time data capabilities, and improve supply chain and commercial responsiveness. These technology investments reflect a strategic shift aimed at building greater long-term resilience, margin efficiency, and digital agility. Clorox also continues to navigate the aftereffects of its August 2023 cyberattack, which disrupted operations and delayed innovation timelines.

Why It Matters: Clorox’s transformation underscores how large-scale IT modernization can extend well beyond infrastructure to enable enterprise-wide change. The new ERP system replaces a decades-old legacy platform, allowing for real-time visibility into trade activity, supply chain flows, and retail inventory. Layered with AI tools that enhance planning and execution, Clorox is now positioned to operate with greater precision and adaptability in a cost-sensitive and promotion-heavy consumer environment.

• Complete ERP Rebuild Enables Real-Time Enterprise Visibility: Clorox has replaced its 25-year-old ERP with a greenfield system that spans core areas including order management, inventory tracking, and trade execution. This infrastructure upgrade supports data-driven decision-making across teams and allows the company to respond more quickly to demand signals and operational disruptions. The multi-phase rollout included a major retailer pre-build to ensure order continuity, and is now entering a stabilization phase. Clorox expects the platform to serve as a foundational capability for improved supply chain and commercial execution going forward.

• AI Tools Deployed Across Pricing, Planning, and Advertising Optimization: The company is now actively using artificial intelligence, including both generative and predictive models, within core workflows such as demand forecasting, revenue management, and marketing execution. These tools are layered onto the new ERP infrastructure to improve responsiveness and reduce manual overhead. Clorox plans to continue investing in AI capabilities at a sustainable rate and sees it as a key lever for execution speed and commercial precision in an increasingly dynamic marketplace.

• ERP-Driven Productivity Expected to Support Future Margin Expansion: Although transition-related costs continue to flow through selling and administrative expenses in fiscal 2026, Clorox expects to begin realizing structural productivity gains from its ERP implementation in subsequent years. The platform is central to the company’s broader holistic margin management strategy, which includes enhanced tracking of trade spend, real-time scenario modeling, and improved cost discipline. These efforts are expected to support both profitability and reinvestment in innovation and brand-building.

• Retailer Behavior Not Expected to Change Despite Improved Systems: While the new ERP significantly improves Clorox’s internal visibility and fulfillment capabilities, the company does not expect structural changes in retailer ordering patterns. Retail partners are maintaining existing inventory expectations, and the benefits of the ERP will accrue primarily through Clorox’s ability to meet those expectations more efficiently and with greater reliability, reducing internal friction rather than altering demand dynamics.

• Cybersecurity Remains a Concern: Clorox continues to operate against the backdrop of its August 2023 cyberattack, which affected supply chain execution and delayed product innovation cycles. Some businesses are still recovering share lost during that period. The incident highlighted vulnerabilities in legacy systems and underscored the importance of accelerating digital transformation, both to improve resilience and to modernize consumer-facing execution. Clorox’s recent technology upgrades reflect both a forward-looking operational agenda and a response to prior exposure.

Go Deeper -> Clorox 2025 Earnings – MarketBeat

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