As it turns out, we never really needed Clorox to fight covid-19. The virus doesn’t spread easily via contaminated surfaces, so theatrically wiping down desks and doorknobs with bleach did little to contain contagion (and misguided attempts to fight the virus by drinking bleach were outright harmful).
But even so, Clorox sales have become a good proxy for the public’s level of pandemic worry, especially in the US, the company’s largest market. As covid case counts rose, so did sales reported under Clorox’s “health and wellness” category, which includes cleaning supplies such as bleach wipes; industrial-grade liquid bleach to disinfect hospitals, offices and stores; and a handful of vitamins and dietary supplements.
In 2020, when Clorox wipes regularly sold out at stores, the company tried to meet demand by hiring contract manufacturers in Asia to ramp up production. But now, Clorox is firing those contract manufacturers and scaling back production as the pandemic reaches “more of an endemic phase,” CEO Linda Rendle told investors on a May 2 earnings call. Although sales ticked up briefly in the most recent quarter on fears of the omicron wave, Clorox expects Americans to return to their pre-pandemic level of bleach consumption, reflecting a broader shift in consumer spending.
Clorox is plagued by pandemic supply chain issues
Although covid anxiety boosted Clorox sales, the pandemic hasn’t been as much of a boon to the company as it could have been. At the height of the pandemic, Clorox lost sales because of frequent stockouts. Once Clorox boosted production by hiring contract manufacturers in Asia, it was saddled with extra transportation costs as ocean freight rates hit record highs. As a result, Clorox’s gross profit margins before interest and taxes have slumped during the pandemic. By slashing outside manufacturing, Clorox hopes to cut costs and raise its profits.