* Focus on affordability responds to recession
* Handful of new products planned for fiscal 2010
* Lowering debt-to-EBITDA ratio
* Shares rise 0.3 percent
(Adds details of recent stock activity)
By Jessica Wohl
NEW YORK, June 11 Clorox Co (CLX.N) is
following the lead of recession-hit shoppers, moving away from
a focus on convenience to promote the affordability of its
bleach, water filters and other products.
When Clorox unveiled its "Centennial Strategy" in May 2007,
it outlined four focus areas. It updated that plan on Thursday,
once again emphasizing tactics to go after the trends of health
and wellness, sustainability and a market that has become more
multicultural. Now, instead of the fourth area being a focus on
convenience, Clorox is taking note of shoppers' spending
"Consumers are increasingly focused on value, and we expect
this trend to continue even after the economy recovers," said
Chairman and Chief Executive Don Knauss.
Knauss said he expects to start seeing some economic growth
by the fourth quarter of this year or, more likely, by the
first quarter of 2010.
"You can't dump $1 trillion plus into the economy and not
see something happen," he said in an interview.
Before the recession hit, Clorox was introducing items such
as a wand product for which consumers buy replacement pads to
clean their bathrooms.
As cash-strapped consumers increasingly seek out less
expensive items, the company is emphasizing value in its
marketing. One campaign shows mothers how to dilute Clorox
bleach to clean toys. Another shows that a Brita water filter
eliminates the need for 300 bottles of water and that a glass
of water from the filter costs about a penny.
While some consumers Clorox has spoken with "will forsake
convenience for affordability," taking steps such as making
their own baby food rather than buying pre-made food, there is
also a small "pretty robust" group of consumers willing to pay
for products that command higher prices, Knauss said.
Clorox said it would launch two Green Works natural laundry
products next month priced above conventional detergents and
"It is a super premium niche, no doubt about it," Knauss
He said the 95 percent natural detergent is a value for
those looking for "green" cleaning products. Conventional
detergents are about 60 to 65 percent natural, Knauss said,
joking that much of that natural base is water.
Another new product set to debut in fiscal 2010 is a
Kingsford charcoal briquette that is easier to light and heats
up faster. The company will also launch a Glad ForceFlex bag
that stays in place better in trash cans. Those two new items
will keep the same prices as products already on the market as
Clorox tries to keep value-oriented consumers from trading down
to other products.
"We kept convenience in the background of that
affordability trend," Knauss said.
While there is renewed emphasis on value, the company said
it would maintain the dozens of price increases it has taken in
recent years. Of the more than 50 price hikes Clorox put in
place to help offset higher costs, it has only taken down the
price of Glad trash bags. The bags are still priced higher than
they were before the first price hike was taken.
Clorox also maintained its financial forecasts for 2010 and
its goals through 2013 [ID:nN11467201]. It now aims to lower
its debt-to-EBITDA ratio to a range of 2 to 2.5, from a prior
target of 2.5 to 3 and from March's 2.85 level. It could start
buying back shares in the second half of fiscal 2010.
The changes in Clorox's financial policies are "welcome
news" for bondholders, said GimmeCredit analyst Craig Hutson.
Clorox also said it could need acquisitions to grow
Shares of Clorox rose 16 cents to $53.65. The shares have
risen 3.4 percent so far this year, while those of larger rival
Procter & Gamble Co (PG.N) have fallen more than 15 percent.
(Reporting by Jessica Wohl; Editing by Gunna Dickson, Steve
Orlofsky, Gary Hill)