Clorox is doubling down on its investments in advertising as demand for cleaning supplies and other products continues to remain high during the coronavirus pandemic.
The company increased spending on advertising by 30% last quarter and Linda Rendle, who took over as chief executive in September, expects spending to be up again in the current quarter.
“We want to take an opportunity to play offense and so with that we are investing,” she said in a “Mad Money” interview with CNBC’s Jim Cramer. “We’re going to continue to increase that investment through the remainder of the year because we want to serve more people around the world and we have a unique opportunity to do that as people’s behaviors are changing.”
Clorox, which markets a wide range of cleaning, food and personal care supplies, among other products, on Monday reported its third-straight quarter of double-digit revenue growth amid the global health crisis. The company reported $179 million in advertising costs, up from $137 million in the September quarter in 2019.
It was the third time Clorox increased its advertising spend in a quarter in 2020 as consumers stock up on disinfectant wipes, cleaners and other household supplies like charcoal in a stay-at-home world. Clorox increased advertising spend by 14% in the quarter that ended in March and 28% in the quarter that ended in June.
In recessionary environments, marketing expenses are usually among the first areas that businesses cut back on. Clorox, however, said it expects advertising and sales promotion spending to come in at about 11% of sales.
Rendle said demand was up double digits in eight out of the company’s 10 business units in the July-September period.
“We have such a moment here for our brands where more consumers are bringing them into their households across our portfolio,” Rendle said. “We have seen household penetration that is stable or increasing double in our portfolio year over year.”
Clorox reported revenue of $1.92 billion, up 27% year over year, and earnings per share of $3.22, more than double what it reported in the same period last year. The results soundly beat Wall Street’s estimates.
It was Clorox’s best sales jump in more than two decades. The company now predicts full-year sales could grow in the range of 5% to 9% and earnings per share to grow between 5% and 8%.
“We’re just seeing broad-based support as we continue to support people as they stay at home, they eat more meals at home and of course as they’re cleaning and disinfecting more,” Rendle said.
Shares of Clorox rose 4% in Monday’s session closing at $216.03. The stock is up more than 40% in 2020.
