We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Clorox's Pricing Power Hold as Consumer Elasticity Tightens?
Read MoreHide Full Article
Key Takeaways
CLX sees tighter elasticity as shoppers shift to small packs, trade-down options and value-driven purchases.
Clorox uses price-pack architecture, promotions and value sizing to protect affordability and brand equity.
CLX faces margin pressure as Q1 gross margin fell 410-bps and FY26 margins are guided toward the low end.
The Clorox Company, Inc. (CLX - Free Report) is navigating a tougher consumer environment where pricing power is increasingly tested by heightened value-seeking behavior. Management acknowledged that category growth has stabilized but remains below historical levels, while competitive intensity is elevated as brands fight for wallet share. The company acknowledged that consumers across income segments are under pressure, prompting shifts toward smaller pack sizes, usage stretching and trade-down options within portfolios.
Rather than relying solely on price increases, Clorox is leveraging price pack architecture and targeted promotions to protect brand equity while maintaining affordability. The company is expanding smaller-size offerings in businesses like Brita, Food and Kingsford, while dilutable cleaners in its Cleaning segment are resonating with cost-conscious shoppers by delivering versatility at a lower effective price point.
At the same time, Clorox is seeing strong demand for larger, value-oriented formats in Club and eCommerce channels, highlighting a polarized consumer response rather than outright resistance to pricing. Clorox continues to find areas where consumers are willing to pay a premium, particularly for convenience and time savings. Growth in wipes, convenience toilet cleaners and ready-to-eat innovations like Hidden Valley Ranch Dippers & Toppers suggests pricing power can still hold where value is clearly differentiated.
However, margin pressure remains a clear overhang. In the first quarter of fiscal 2026, Clorox’s gross margin declined 410 basis points (bps), driven by lower fixed-cost absorption tied to volume declines from the ERP-related shipment disruption, alongside higher manufacturing and logistics costs. While cost savings provided some offset, elevated expenses, including storm-related manufacturing impacts and stepped-up digital investments, weighed meaningfully on profitability.
Management also expects fiscal 2026 gross margin to trend toward the lower end of its guidance range of 50 to 100 bps, reflecting lingering ERP-related headwinds and an uncertain tariff environment. As pricing flexibility narrows and promotional intensity rises, Clorox’s ability to fully rebuild margins could remain constrained in the near term, even as demand stabilizes.
While consumer elasticity in the near term is tightening, Clorox’s diversified approach, balancing affordability, value sizing and premium convenience, appears better positioned than blunt pricing actions alone. With brand health metrics such as household penetration and loyalty remaining stable, the company’s pricing power may not be absolute, but it remains selectively resilient in a constrained consumer landscape.
The Zacks Rundown for CLX
In the past six months, CLX’s shares have plunged 16.7% compared with the industry’s decline of 11.9%. CLX carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
From a valuation standpoint, CLX trades at a forward price-to-earnings ratio of 16.15X, lower than the industry average of 17.73X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CLX’s fiscal 2026 earnings implies a year-over-year decline of 24%, while fiscal 2027 earnings suggest a year-over-year rise of 15.8%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
United Natural Foods, Inc. (UNFI - Free Report) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings implies growth of 1% and 187.3%, respectively, from the year-ago figures. UNFI delivered a trailing four-quarter earnings surprise of 52.1%, on average.
The Vita Coco Company, Inc. (COCO - Free Report) develops, markets, and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa, and the Asia Pacific. COCO currently flaunts a Zacks Rank #1.
The Zacks Consensus Estimate for Vita Coco's current fiscal-year sales and earnings implies growth of 18% and 15%, respectively, from the year-ago figures. Vita Coco delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Monster Beverage Corporation (MNST - Free Report) engages in the development, marketing, sale, and distribution of energy drink beverages and concentrates in the United States and internationally. MNST currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Monster Beverage's current fiscal-year sales and earnings implies growth of 9.6% and 22.2%, respectively, from the year-ago figures. MNST delivered a trailing four-quarter earnings surprise of 5.5%, on average.
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
Will Clorox's Pricing Power Hold as Consumer Elasticity Tightens?
Key Takeaways
The Clorox Company, Inc. (CLX - Free Report) is navigating a tougher consumer environment where pricing power is increasingly tested by heightened value-seeking behavior. Management acknowledged that category growth has stabilized but remains below historical levels, while competitive intensity is elevated as brands fight for wallet share. The company acknowledged that consumers across income segments are under pressure, prompting shifts toward smaller pack sizes, usage stretching and trade-down options within portfolios.
Rather than relying solely on price increases, Clorox is leveraging price pack architecture and targeted promotions to protect brand equity while maintaining affordability. The company is expanding smaller-size offerings in businesses like Brita, Food and Kingsford, while dilutable cleaners in its Cleaning segment are resonating with cost-conscious shoppers by delivering versatility at a lower effective price point.
At the same time, Clorox is seeing strong demand for larger, value-oriented formats in Club and eCommerce channels, highlighting a polarized consumer response rather than outright resistance to pricing.
Clorox continues to find areas where consumers are willing to pay a premium, particularly for convenience and time savings. Growth in wipes, convenience toilet cleaners and ready-to-eat innovations like Hidden Valley Ranch Dippers & Toppers suggests pricing power can still hold where value is clearly differentiated.
However, margin pressure remains a clear overhang. In the first quarter of fiscal 2026, Clorox’s gross margin declined 410 basis points (bps), driven by lower fixed-cost absorption tied to volume declines from the ERP-related shipment disruption, alongside higher manufacturing and logistics costs. While cost savings provided some offset, elevated expenses, including storm-related manufacturing impacts and stepped-up digital investments, weighed meaningfully on profitability.
Management also expects fiscal 2026 gross margin to trend toward the lower end of its guidance range of 50 to 100 bps, reflecting lingering ERP-related headwinds and an uncertain tariff environment. As pricing flexibility narrows and promotional intensity rises, Clorox’s ability to fully rebuild margins could remain constrained in the near term, even as demand stabilizes.
While consumer elasticity in the near term is tightening, Clorox’s diversified approach, balancing affordability, value sizing and premium convenience, appears better positioned than blunt pricing actions alone. With brand health metrics such as household penetration and loyalty remaining stable, the company’s pricing power may not be absolute, but it remains selectively resilient in a constrained consumer landscape.
The Zacks Rundown for CLX
In the past six months, CLX’s shares have plunged 16.7% compared with the industry’s decline of 11.9%. CLX carries a Zacks Rank #3 (Hold).
Image Source: Zacks Investment Research
From a valuation standpoint, CLX trades at a forward price-to-earnings ratio of 16.15X, lower than the industry average of 17.73X.
Image Source: Zacks Investment Research
The Zacks Consensus Estimate for CLX’s fiscal 2026 earnings implies a year-over-year decline of 24%, while fiscal 2027 earnings suggest a year-over-year rise of 15.8%.
Image Source: Zacks Investment Research
Stocks to Consider
Some better-ranked stocks have been discussed below:
United Natural Foods, Inc. (UNFI - Free Report) distributes natural, organic, specialty, produce and conventional grocery and non-food products in the United States and Canada. At present, United Natural sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for United Natural’s current fiscal-year sales and earnings implies growth of 1% and 187.3%, respectively, from the year-ago figures. UNFI delivered a trailing four-quarter earnings surprise of 52.1%, on average.
The Vita Coco Company, Inc. (COCO - Free Report) develops, markets, and distributes coconut water products under the Vita Coco brand name in the United States, Canada, Europe, the Middle East, Africa, and the Asia Pacific. COCO currently flaunts a Zacks Rank #1.
The Zacks Consensus Estimate for Vita Coco's current fiscal-year sales and earnings implies growth of 18% and 15%, respectively, from the year-ago figures. Vita Coco delivered a trailing four-quarter earnings surprise of 30.4%, on average.
Monster Beverage Corporation (MNST - Free Report) engages in the development, marketing, sale, and distribution of energy drink beverages and concentrates in the United States and internationally. MNST currently sports a Zacks Rank #1.
The Zacks Consensus Estimate for Monster Beverage's current fiscal-year sales and earnings implies growth of 9.6% and 22.2%, respectively, from the year-ago figures. MNST delivered a trailing four-quarter earnings surprise of 5.5%, on average.