Clorox doubles its advertising investment as demand for detergents and other products remains high during the coronavirus pandemic.
The company increased ad spend by 30% last quarter, and Linda Rendle, who took over as CEO in September, expects spending to pick up again this quarter.
“We want to take the opportunity to play offensively and with that we are investing,” she said in a “Bad money“Interview with Jim Cramer from CNBC.” We will continue to increase this investment later in the year because we want to serve more people around the world and we have a unique opportunity to do so when people’s behavior changes. “
Clorox, which markets a wide range of cleaning, food and personal care products, among others, reported its third straight quarter on Monday with double-digit sales growth amid the global health crisis. The company reported advertising costs of $ 179 million, up from $ 137 million in the September 2019 quarter.
It was the third time in a quarter of 2020 that Clorox increased its advertising spend as consumers stock up on disinfectant wipes, cleaning supplies, and other household items like charcoal in a home-stayed world. Clorox increased ad spend 14% for the quarter that ended March and 28% for the quarter that ended June.
In a recessive environment, marketing costs are usually one of the first areas companies realize savings. However, Clorox estimates that advertising and promotional spending will account for about 11% of sales.
According to Rendle, demand in eight of the company’s ten business units was in double digits from July to September.
“We have a moment here for our brands where more consumers are bringing them into their homes in our household,” said Rendle. “We have found that the household penetration in our portfolio is stable or doubling from year to year.”
Clorox had sales of $ 1.92 billion, up 27% year over year, and earnings per share of $ 3.22, more than double the same period last year. The results significantly exceeded Wall Street estimates.
It was Clorox’s best jump in sales in more than two decades. The company is now forecasting an increase in sales of between 5% and 9% and earnings per share of between 5% and 8% for the full year.
“We only see broad support as we continue to support people when they stay at home, eat more meals at home and of course do more cleaning and disinfecting,” said Rendle.
Clorox shares rose 4% on Monday to close at $ 216.03. The stock is up more than 40% in 2020.