Clorox CEO confident in growth prospects, even after disappointing quarter and guidance

  • Despite Clorox's earnings miss and disappointing 2022 sales forecast, CEO Linda Rendle remains confident in its long-term prospects.
  • "If you look at the fundamentals of our business, our brands have never been stronger," she said in a "Mad Money" interview.
  • The CEO said Clorox was "taking all the necessary actions" to combat cost pressures that hurt gross margins in the fourth quarter.

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Clorox CEO Linda Rendle defended the company's long-term prospects Tuesday, telling CNBC its disappointing fourth-quarter earnings and 2022 sales forecasts are the result of temporary factors that will wane with time.

In an interview with CNBC's Jim Cramer on "Mad Money," Rendle said Clorox is emerging from the coronavirus pandemic "a much stronger company" even if repeating the magnitude of sales growth it saw during the health crisis is a difficult task.

"So, we did miss, but I think the important thing is … if you look at the fundamentals of our business, our brands have never been stronger," said Rendle, who took over as CEO in September 2020. "We're investing in those brands and investing for the long term and we have every confidence that we will continue to increase and accelerate the profitable growth of the company over the long term."

Shares of Clorox plunged 9.46% Tuesday to finish the session at $164.06. The stock is now down nearly 19% year to date and about 29% in the past 12 months. Clorox sales fell 9% in the fourth quarter compared with the same period last year, a time when consumers were stocking up on the company's cleaning products in response to Covid concerns.

"Health, wellness and hygiene is not going away. The consumption of our cleaning business, for example, is 25% higher than it was pre-pandemic. People are doing more things to take care of themselves. They're drinking more water," Rendle said, likely alluding to the company's ownership of water filter brand Brita. Its other brands include Glad, Burt's Bees and namesake Clorox.

Adjusted earnings per share of 95 cents fell short of expectations of $1.35 per share. The profit miss was due, partly, to what Rendle described as an "unprecedented cost environment" as supply chains remain disheveled. However, she emphasized the company is doing what it can to counteract those cost pressures while remaining optimistic on the broader demand picture.

"They're staying at home given the fact there's hybrid work. Our portfolio will benefit from that, and we are fully ready to take advantage of that in the future," Rendle added. "What we need to get through is the next six months. We're taking all of the necessary actions when it comes to cost savings, pricing, to deal with margin. … What we see in the back half of our year is returning to the low end of our sales algorithm and beginning to expand gross margin in Q4."

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