Clorox Business Model has Lost Competitiveness with Retailers

By Sam Boughedda

Clorox (NYSE:) was initiated with an Underperform rating by Evercore ISI analysts on Tuesday.

They told investors in a research note based around global household and personal care stocks that in its structural framework, Clorox screens low, “not just because of Clorox’s fragmented portfolio, but because the firm’s business model has also lost competitiveness with retailers like  to Reynolds.”

“Three reasons,” wrote the analysts. “1) E-commerce intersects Clorox’s most, complicating execution; 2) this shift to online makes Clorox less relevant to WMT; 3) the fix to manage complexity and the firm’s ‘Ignite’ strategy is expensive: $500M spread over a ‘few years’ in digitalization (SG&A) and ERP that would eat into some of the potential windfall from commodities CLX discounts trading at 200% premium.” The analysts said the firm also feels “CLX is the most vulnerable to execution glitches.”

Clorox shares are up over 1% during today’s session but have fallen over 22% in 2022.

Elsewhere on Tuesday, UBS analysts lowered the price target on Clorox to $119 from $129 per share, maintaining a Sell rating.