Clorox Company

Cybersecurity and data protection · Third party data security and vendors

To conduct its business, the Company relies extensively on IT and operational technology (OT) systems, many of which are managed, hosted, provided and/or used by third parties and their vendors... Reliance on third-party service providers and interconnected systems may further complicate incident response efforts and expose the Company to risks arising from their activities, including incidents that originate with or affect third parties.

Cybersecurity and data protection · Data breaches and cyber attacks

Failure of key technology systems, cyberattacks, privacy breaches or data breaches could have a material adverse effect on the Company's business, financial condition, results of operations and reputation... The Company experienced a cyberattack in August 2023 and may continue to experience an increase in the number of such attacks, which may result in unauthorized access to or disclosure of information and increased response and remediation costs.

Cybersecurity and data protection · Data privacy and protection regulations

The Company is subject to the laws and regulations of various countries where it operates related to solicitation, collection, processing, transferring, storing or use of consumer, customer, business partner or employee information or related data. The Company has incurred, and will continue to incur, expenses to comply with privacy and data protection standards and protocols imposed by law, regulation, industry standards and contractual obligations.

Economic and market conditions · Market volatility and financial crises

Increasingly unfavorable macroeconomic and geopolitical conditions have caused, and may also lead to, recession risk, increased credit and collectability risks, higher borrowing costs or reduced availability of capital and credit markets, reduced liquidity, asset impairments, declines in the value of the Company's financial instruments, and failures of counterparties including financial institutions and insurers.

Economic and market conditions · Consumer spending and confidence

Sustained macroeconomic uncertainty and volatility and geopolitical instability could undermine global consumer confidence and could continue to reduce consumer spending and purchasing power, thereby reducing demand for the Company's products, disrupting global supply chains, and affecting the availability and cost of transportation, raw materials, labor and packaging.

Geopolitical and trade · Trade policies tariffs and sanctions

These factors include, but are not limited to, inflation, interest rates, supply chain and logistics disruptions, labor market conditions, trade restrictions and tariffs, changes in trade policies and trade agreements, including the ongoing joint review of the United States-Mexico-Canada Agreement (USMCA)... Continued uncertainty regarding the outcome of the USMCA joint review process, which could result in modifications to the agreement, a period of annual reviews, or termination, may further affect cross-border trade, sourcing, and supply chain arrangements across North America.

Geopolitical and trade · International conflicts and tensions

In addition, geopolitical instability (including conflicts in Ukraine and the Middle East and other ongoing conflicts and regional tensions affecting global energy markets and key shipping routes, as well as trade tensions among major economies and rising tensions between China and Taiwan) has significantly increased global macroeconomic uncertainty and volatility.

Natural and catastrophic events · Climate change and environmental impact

Climate change and other sustainability issues may have an adverse effect on the Company's business, financial condition and results of operations and could damage its reputation... The Company is subject to climate-related transition risks, including increased energy costs due to increasing demand for alternative energy sources and new or increased legal and regulatory requirements to reduce or mitigate impacts to the environment.

Economic and market conditions · Economic recession and downturns

Unfavorable or uncertain global macroeconomic factors that are beyond the Company's control have materially adversely affected, and could continue to materially adversely affect, its business, results of operations, financial condition and liquidity... Sustained macroeconomic uncertainty and volatility and geopolitical instability could undermine global consumer confidence and could continue to reduce consumer spending and purchasing power, thereby reducing demand for the Company's products.

Market position and competition · Competitive pressure and market share loss

The Company faces intense competition from consumer product companies both in the U.S. and in its international markets, and the Company's ability to maintain or gain market share may be impacted by the actions of competitors... Heightened competitive activity from strong local competitors, other large multinational companies, and new entrants into the market may result in more aggressive product claims and marketing challenges, increased promotional spending and geographic expansion.

Market position and competition · Disruptive competitors and new market entrants

Some of the Company's competitors are larger than the Company and have greater financial resources. These competitors, as well as new or smaller market entrants, may choose to spend more aggressively on advertising and promotional activities, introduce competing products more quickly, adopt new technology, such as artificial intelligence and machine learning, more quickly and successfully, and respond more effectively to changing business and macroeconomic conditions and consumer preferences than the Company can.

Market position and competition · Pricing pressure and margin compression

Competitive activity may require the Company to increase its spending on advertising and promotions and/or reduce prices, which could lead to reduced sales, margins and/or net earnings. In addition, in B2B channels, including healthcare and other institutional markets, customers may shift to lower-cost alternatives, reduce usage or purchasing volumes, or renegotiate product specifications in response to budgetary, reimbursement or other cost pressures, which could adversely impact demand, pricing, and margins for the Company's products.

Customer and revenue · Changing customer preferences and behavior

Consumer preferences continue to evolve due to a number of factors, including macroeconomic volatility and uncertainty and inflation, which could cause consumers to purchase a smaller pack or quantity of a product or seek category alternatives or a lower priced alternative to the Company's products; fragmentation of the consumer market and changes in consumer demographics, including the emergence of millennials, Generation Z and younger generations who have different spending, consumption and purchasing habits.

Customer and revenue · Customer concentration and key customer dependence

A limited number of customers account for a large percentage of the Company's net sales. Net sales to the Company's largest customer, Walmart Stores, Inc. and its affiliates, were 26%, 27% and 25% of consolidated net sales for the fiscal years ended June 30, 2026, 2025 and 2024, respectively... The Company's five largest customers accounted for about half of the Company's consolidated net sales for each of the fiscal years ended June 30, 2026, 2025, and 2024.

Customer and revenue · Revenue concentration in specific products or segments

A large percentage of the Company's revenues comes from mature markets that are subject to high levels of competition. During fiscal year 2026, 84% of the Company's net sales were attributable to U.S. markets, including U.S. territories... The Company's product, category and/or geographic mix may hinder the Company's ability to meet these strategic targets, especially in conjunction with ongoing macroeconomic volatility and uncertainty.

Innovation and product development · Product development and randd investment risks

The Company's ability to achieve its sales growth targets depends on innovation and its ability to successfully develop or license capabilities to introduce new products, brands, line extensions and product innovations or enter or expand into adjacent product categories, sales channels, markets or countries... Executing on this focus requires substantial and sustained investments, including in research and development, which must be balanced against competing demands such as sustaining the Company's existing business, addressing quality matters, and advancing margin improvement initiatives.

Innovation and product development · Time to market and commercialization risks

New product and product packaging development and marketing efforts, including efforts to enter markets or product categories in which the Company has limited or no prior experience, not only incur substantial capital expenditures but also contain inherent risks. These risks include product development or launch delays, non-compliance with applicable laws or regulations, or infringement of third-party intellectual property, any of which could result in the Company not being first to market.

Innovation and product development · Intellectual property protection and infringement

Failure to effectively utilize, successfully assert or successfully defend, the Company's intellectual property rights could impact its competitiveness. If the Company is found to have infringed the intellectual property rights of others or cannot obtain necessary intellectual property rights, its competitiveness could be negatively impacted... If the Company is found to have violated a third party's intellectual property rights, the Company may be required to cease use of such intellectual property and pay a substantial amount for past infringement or for continued use of those intellectual property rights.

Strategic execution · Strategic transformation and turnaround risks

The Company has implemented and has been implementing certain strategic and transformational initiatives intended to generate cost savings, improve operational efficiencies and enhance its competitive position. These initiatives include the implementation of a new ERP system, expansion of digital capabilities and productivity enhancements... These initiatives (and their concurrent execution) may have unintended consequences, such as business disruptions, diversion of management attention, reduced employee morale and productivity, and negative impacts on relationships with customers, suppliers, and business partners.

Strategic execution · Merger acquisition and divestiture risks

In connection with its strategy, the Company expects to continue to seek acquisition, joint venture and investment opportunities... all acquisitions, joint ventures, and investments entail numerous risks, including risks relating to the Company's ability to successfully integrate acquired businesses, systems, and personnel; maintain uniform standards, controls, procedures, and policies throughout acquired companies... achieve expected synergies and strategic benefits within anticipated timeframes, if at all.