07.05.07
10. Clorox
Oakland, CA
510.271.7000
www.clorox.com
Sales: $2.9 billion
Sales:
$2.9 billion for household and I&I products. Corporate sales: $4.6 billion. Net income: $444 million.Key Personnel:
Donald R. Knauss, chairman and chief executive officer; Lawrence S. Peiros, executive vice president and chief operating officer, Clorox North America; Beth Springer, executive vice president, strategy and growth; Frank Tataseo, executive vice president, functional operations; Warwick Every-Burns, senior vice president, international; Daniel J. Heinrich, senior vice president, chief financial officer; Jacqueline P. Kane, senior vice president, human resources and corporate affairs; Laura Stein, senior vice president, general counsel and secretary; Tarang Amin, vice president, global health and wellness; Tim E. Bailey, vice president, product supply; Thomas P. Britanik, vice president and general manager, U.S. auto care and Brita; Benno Dorer, vice president, general manager, household division; Robin Evitts, vice president, chief information officer; John Hommeyer, vice president, growth; Thomas D. Johnson, vice president, controller and chief accounting officer; Grant J. LaMontagne, vice president, sales; Stephen M. Robb, vice president, financial planning & analysis; George C. Roeth, vice president, general manager, specialty division; Glenn R. Savage, vice president, general manager, cleaning division; Keith R. Tandowsky, vice president, internal audit.
Chief Technical Officer:
Wayne L. Delker, Ph.D., vice president, research and development.
Chief Marketing Officer:
Derek A. Gordon, vice president, marketing.
Major Products:
Home care—Clorox, Clorox Clean-Up, Formula 409, Handi-Wipes, Lestoil, Liquid-Plumr, Pine-Sol, Soft Scrub, S.O.S., Tilex. Laundry additives—Clorox, Clorox 2. Auto care—Armor All, STP, Tuff Stuff. Professional products—Clorox, Clorox Clean-Up, Combat, Formula 409, Liquid-Plumr, Pine-Sol, S.O.S., Tilex.New Products:
Clorox Anywhere hard surface cleaner, Clorox Anywhere hand sanitizing spray, Clorox UltimateCare bleach, Liquid Plumr Power Jet.Comments:
Corporate sales rose 6%, that’s a bit above annual growth goals of 3-5%. By segment, North American household sales rose 5% to $2.1 billion; specialty sales rose 6% to $1.9 billion and international sales rose 9% to $600 million. Driving growth was the company’s continued focus on health and wellness, which is based on the 93-year heritage of Clorox bleach.For the third quarter ended March 31, 2007, sales grew 7% to $1.24 billion. Volume increased 8%, primarily driven by increased shipments in North American home care products and laundry and cleaning products in Latin America due to category growth. The recent bleach acquisition in Latin America gave Clorox the No. 1 position in the Dominican Republic and Colombia and was a gateway into Canada, Ecuador, Venezuela and Uruguay.
A Growth Spurt at 100?
In May, Clorox unveiled The Centennial Strategy, its strategic growth plan that coincides with its milestone anniversary in 2013. The strategy is focused on achieving double-digit annual growth in economic profit. A key driver is growing existing brands, including expanding into adjacent categories, entering new sales channels and increasing penetration within existing countries. The company also anticipates using its strong cash flow to pursue growth opportunities and increase shareholder returns. The objective is to achieve annual sales growth of 3-5% (excluding acquisitions and expansion into new geographies); and operating profit margin growth of 50-75 basis points.
“Most of our brands hold No. 1 or strong No. 2 market-share positions, and over the past 10 years we’ve outpaced our peer group and the S&P 500 in total shareholder returns,” said Don Knauss, chairman and chief executive officer. “But we know our continued success will require approaching our business in new ways.”
Economic profit, defined as the profit a company generates over and above the cost of paying for the assets used to run its business, will be the key measure Clorox uses to drive enhanced performance, according to Larry Peiros, executive vice president and chief operating officer, Clorox North America.
“We have always been good at execution and driving down costs,” Mr. Peiros said, “but we believe this new approach can make us even better. We are driving economic profit deeply into specific businesses. We now have a very granular understanding of the sources and drivers of economic profit, with visibility by country, category, channel and even specific product item.”
Company executives insist they will manage businesses more differentially, growing economic profit pools that already exist and eliminating activities that are reducing economic value. Further, the company is restructuring its business units to ensure a clear line of sight to where the most economic value is being generated, and that a new management incentive system will reinforce the focus on profitable sales growth and double-digit annual economic profit growth.
To drive this growth, the company is focused on 3Ds: desire, decide and delight. Desire is about integrated pre-purchase communications that increase consumers’ awareness about how the company’s brands meet their needs. Clorox said it will enhance its marketing communication capabilities to create more consistent messages to consumers wherever they come into contact with the company’s brands. The company will implement a new integrated model for working with its advertising and public relations agencies, linking their compensation to Clorox’s success. Clorox is also increasing its emphasis on multicultural marketing, with a cross-functional team focused on these important consumer segments, and a Hispanic advisory group of customers, academics and non-competing companies.
Decide is about winning at the store shelf—where most purchasing decisions are made—through superior packaging and continued investment in value-creating service capabilities that fuel growth for Clorox and its customers. Clorox will selectively expand the deployment of these services, such as consumer and shopper insights and category advisory expertise, to include the balance of its top 25 customers in the grocery channel. Delight is about continuing to offer high-quality, consumer-preferred products, so consumers will keep coming back to the company’s brands. The company said it will continue to deliver about 2 points of incremental sales growth annually from innovation.
“Of course, innovation cuts across all three of these areas,” Mr. Knauss said. “This approach to driving demand creation behind our core brands will help us increase market share and generate economic profit over the long term.”
Clorox said it will continue to focus on building big-share brands in midsized categories. The company said it will maximize economic profit growth by identifying and pursuing strategic opportunities to broaden the footprint of major brands with organic growth into adjacent categories, channels and countries.
For example, the billion-dollar Clorox brand has evolved from a bleach into a franchise that includes cleaning and disinfecting products for the bathroom, kitchen and around the house. In fact, products other than bleach make up more than half of the franchise. To further broaden the brand’s footprint, Clorox extended its successful health-and-wellness platform into the institutional health-care disinfecting market with the launch of Clorox Anywhere hand sanitizing spray.
The company is also exploring opportunities to grow its presence internationally. Outside of North America, 90% of sales are in four core categories: laundry, home care, bags and wraps and auto care products. The company is focused on Americas, Australia and New Zealand first, where it has a strong competitive advantage. In fact, Clorox closed a Canadian bleach acquisition in December 2006 and a Latin American bleach business in March 2007.
Clorox is also looking at how to more fully capitalize on major global trends toward health and wellness, convenience, environmental sustainability and a more multicultural marketplace.