
How Clorox Has Increased Its Market Share and Outdone Its Rivals
NEW YORK (TheStreet) -- Under relatively new CEO Benno Dorer, 102-year-old Clorox (CLX) - Get Report has been innovating its way to market share gains in the competitive supermarket aisles.
Those innovations have helped to power a 21% surge in the company's stock price in the past year and sales results that are outperforming several big, struggling competitors.
"At the end of the day, the reason why our market share gains are so broad-based is because we have a strong, balanced innovation portfolio across most of our brands," said Dorer in an interview with TheStreet at the company's Oct. 1 analyst day. Dorer took over the reins of Clorox last November.
Clorox estimates that its overall U.S. market share increased by 0.3% in the fourth quarter ended June 30, representing its largest market share gain in four years. Six of the company's eight U.S. business units increased their market share year over year in the quarter, with laundry, home care and charcoal achieving the most sizable improvements.
While the market share of standard Clorox bleach fell, strong demand for its revamped splash-less bleach allowed Clorox to keep its overall bleach share flat year over year. Dorer was also quick to point out that Clorox's Hidden Valley business gained 11 points of market share in the growing flavored ranch market in the fourth quarter, amid a focus on introducing new flavored ranch dressings such as avocado and sriracha.
Clorox also said new product innovations in its Glad trash bag group, such as scented bags, led to "meaningful" market share gains in the category during the June quarter.
Premium Glad trash bags with Febreeze and Gain have been popular with consumers.
The market share gains off these innovative new products continue to lead to solid sales and profit growth for Clorox. Sales and earnings increased by 4% and 11%, respectively in the fourth quarter, led by the company's cleaning and household segments, in particular Glad trash bags and Burt's Bee's cosmetics. For the full fiscal year, Clorox's sales increased 3%, and earnings by 4%.
Clorox's rivals in the consumer products industry have not performed as well. Procter & Gamble (PG) - Get Report , maker of Tide, continues to be sidetracked by its ongoing reduction in its product portfolio and workforce. The company reported that net sales plunged in all five of its business segments in the most recent quarter, further pressuring a stock that has tanked by 13% in the last year.
Kraft Heinz (KHC) - Get Report , meanwhile, is in the midst of slashing costs under new owners 3G Capital Partners and Warren Buffett's Berkshire Hathaway. Sales at Kraft and Heinz fell by 4.9% and 4.1% year over year, respectively, in the second quarter. Since the merger between the two consumer products companies was completed on Jul. 2, shares have fallen 2.1%.
Burt's Bees continues to be expanded into new product categories, such as renewal creams.
"We really only compete with Procter & Gamble in home care, but they are not a very strong player [there] and we are growing share," said Dorer. He also noted that Clorox is taking share away in salad dressing from Kraft.
Sales and market share gains in Clorox's key U.S. businesses have helped it counterbalance ongoing weakness in Fresh Step cat litter and wild swings in currency that have clipped international sales and profits.
Clorox's international sales declined 1% for the fiscal year, with profits plunging 20%. Cat litter was one of two businesses that didn't increase market share in the fourth quarter, said Dorer on an Aug. 3 earnings call. He admitted on the call that better innovations were needed to improve sales of cat litter, a business that represents about 6% of Clorox's annual business. As an example, Clorox will debut Fresh Step featuring Febreeze to help contain odors in 2016.
Despite these struggles, Dorer is not planning for Procter & Gamble-like changes in the company's product portfolio. "I'm pleased with the portfolio to be clear," said Dorer, echoing comments made to TheStreet in Dec. 2014.
Clorox shares have gained about 16% since Benno Dorer assumed the role of CEO on Nov. 20, 2014.
Over the next 12 months, Dorer is hoping that a continued focus on new products and investments in digital marketing will keep the good times rolling.
The company plans to launch its first all-natural lipstick line under Burt's Bees. At Glad, a trash bag with antimicrobial handles will appear on store shelves following company research showing consumers were spraying the rings of their garbage cans with disinfectant.
And Brita will launch what Clorox is calling an "intelligent pitcher" that updates consumers on the status of their water filters and allows them to have a new one ordered automatically.
"What better way of making people buy filters than essentially taking the decision out of their hands and sending them a filter?" said Dorer.
As for marketing, Clorox is targeting to shell out about 41% of its media investment in digital avenues in fiscal year 2016, up from an already impressive 34% a year earlier. The investment in digital is being earmarked toward better targeting consumers based on where they live and what they have shopped for in the past.
In the end, Clorox shareholders shouldn't be too surprised by the barrage of new products from a company long known by those on Wall Street for its discipline and consistency.
"I am a product innovator at heart, and am very comfortable with technology, and appreciate the opportunity that tech could bring to a company like Clorox," Dorer said.











