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Clorox bets big on not going back to normal

Clorox wipesAmanda Voisard/For The Washington Post

Linda Rendle, the CEO of Clorox, knows what the doubters are saying.

That the pandemic moment is fading. That the frenetic sales gains are over. That Clorox’s stock will languish again.

Rendle is convinced they’re all wrong. At just 43, the newly minted CEO is the company’s youngest ever leader — and first woman in the role — but she has been at the consumer products giant for almost two decades. And when she looks at all the scrubbing and wiping (and worrying) of the past year, she doesn’t see habits that will disappear along with the pandemic.

“This behavior is sticky,” Rendle said.

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Her conviction can be seen in an Atlanta suburb, where last week Clorox opened a second production line at a factory that boosted the number of wipes canisters it can ship to 1.5 million each day. To keep that facility busy as COVID-19 recedes, Rendle is increasing the company’s marketing budget by 30 percent and is using the Clorox brand’s sudden high-profile to push into new places, including partnerships with the NBA and Uber.

“We want to do everything we can to keep these people as part of our franchise,” Rendle said. “And continue to bring new people in.”

It’s a pivotal moment for a company that had its fortunes lifted overnight by the pandemic —joining the likes of Zoom and Instacart. Clorox’s portfolio, a lineup that spans pool cleaners to pet odor eaters, took off as Americans stayed home and disinfected their lives. Revenue, which had been eking out low single-digit gains, jumped 23 percent to $7.5 billion in 2020.

Wipes were at the center of the boom. The US category leader with about a 50 percent market share (Lysol is a distant second) sold out in weeks. Rendle, a mother of two, said that even she struggled to keep her home stocked.

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Soon wipes became part of the national conversation, with entire websites dedicated to where to find them. Canadian musical duo Chromeo even seized on the popularity and released “Clorox Wipe” with lyrics like: “If I could reincarnate tonight, I would be your Clorox wipe.” (The video has eight million YouTube views.) By August, Rendle went on “Good Morning America” to reassure host Robin Roberts and the country that more canisters were on the way.

“The category went from zero to 60 in seconds,” said Chris Carey, an analyst for Wells Fargo who said wipes account for roughly 10 percent of the company’s sales and are a top five product line along with Kingsford Charcoal and Glad trash bags. “Companies aren’t set up to handle that.”

By the end of 2020, a year in which the stock surged the most in more than two decades, Clorox had caught up to demand. But investors appear to be discounting the company’s ability to maintain a sizable portion of the COVID boom. And Clorox is not alone; consumer product makers and retailers on the right side of the pandemic are all having to prove that they can hold onto these gains.

In February, Clorox forecast sales would be about flat over the next two quarters (tough comparisons from the height of the pandemic played a major role), and the stock tumbled — it’s now down 15 percent from a record high in January.

“People won’t be disinfecting as much once we get past the pandemic — it will be a slow retreat,” said Linda Bolton Weiser, an analyst for DA Davidson who last week downgraded Clorox shares to the equivalent of a hold. But she said there is a bull case where Clorox retains more of these new customers than expected.

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Rendle points to internal research showing that more than 90 percent of people say they won’t revert back to their pre-COVID cleaning and disinfecting routines. She’s one of them.

“I can’t wait to go into a restaurant again — I cannot wait,” Rendle said during a video call from her home in the San Francisco Bay Area. But when she does, she’ll be thinking: “Are these people here healthy? Have surfaces been cleaned?”

If anyone has a handle on Clorox’s potential, Rendle fits the part. She joined Clorox in 2003 as a sales analyst, just a few years after graduating from Harvard University, where she earned an economics degree and lettered in volleyball. From there, she methodically worked her way up the nearly 9,000-employee company with 13 titles in 17 years. By May, she had climbed to president as the heir apparent and four months later became CEO, replacing Benno Dorer, another longtime Clorox veteran who’d been in the top job for almost six years.

When COVID hit the US a year ago, 70 days of inventory in wipes disappeared in two weeks. For months, Clorox struggled to fill those empty shelves. Then it started work on adding a production line to its factory about 10 miles south of Atlanta in Forest Park, Ga.

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Nimbleness has rarely been associated with packaged goods companies like Clorox, but its initial breakthrough came from a big pivot early on. The company was founded in 1913 in Oakland, Calif. — where it’s still headquartered — when five men each put in $100 to build America’s first liquid bleach factory. Within a few years, an early investor led the company, and it was his wife, Annie Murray, who pitched the idea to dilute industrial strength bleach for home use. She was ahead of her time, building demand with free samples at her nearby grocery store.

From there, Clorox was a one-product company for more than half a century. Procter & Gamble acquired it in 1957, only to divest it about a decade later after losing an antitrust case at the US Supreme Court. Independent again, it ignited growth by creating in-house brands, like Soft Scrub, and acquired others, including turning the masses onto Hidden Valley ranch salad dressing after a deal in 1972.