Mad Money

Clorox CEO boosts ad spend by $50 million as disinfectant demand surges amid coronaviurs pandemic

Share
Key Points
  • "The Clorox Company will invest $50 million more in advertising sales promotion in the back half of our fiscal year" as part of efforts to meet demand during coronavirus pandemic, CEO Benno Dorer said.
  • "We saw demand surge in some of our disinfecting categories by 500%" last quarter "and no supply chains in the packaged goods industry is currently set up that way," he said in a "Mad Money" Interview.
  • "We're investing in future capacities so that we're better equipped to meet the demand in future surges, hopefully, and we expect to be in a much better shape with substantial improvements this summer," he said.
VIDEO2:1002:10
Clorox CEO talks high demand for disinfectant products amid coronavirus pandemic

Clorox will boost marketing spending by tens of millions of dollars in efforts to meet high demand for disinfectant and other household products amid a coronavirus pandemic, CEO Benno Dorer told CNBC's Jim Cramer Friday.

"I hear a lot about companies investing less in their brands these days," he said in a "Mad Money" interview. "The Clorox Company will invest $50 million more in advertising sales promotion in the back half of our fiscal year because we believe this is the time to serve as many consumers as possible, not just with disinfectant products but also as people grill more as they stay home."

The advertising industry has watched business dry up as businesses cut back on their marketing budgets. Marketing spend is typically among the first expenses companies draw back on during a financial downturn, and it's no different during the health crisis that has brought global commerce to a near halt

Millions of people around the world have been in quarantine as society grapples with the deadly contagion that has infected more than 3 million people worldwide and north of 1 million people in the U.S. Consumers, who are spending more time locked inside, have loaded up on groceries and cleaning supplies, such as bleach and wet wipes, as they play their part to help slow the spread of Covid-19.

"We saw demand surge in some of our disinfecting categories by 500%, and no supply chains in the packaged goods industry is currently set up that way," Dorer said. "We have turned out 40 million disinfectant products more this last quarter than in the previous year quarter for an output increase of 40%."

In its fiscal 2020 third quarter, Clorox reported profits of $1.89 per share on $1.78 billion in total revenue, smashing Wall Street's estimates for the three-month period that was defined by business closures and stay-at-home mandates because of the virus crisis.

Sales were up 15% from the year ago quarter and up 32% for the cleaning products segment. Wall Street analysts are projecting total sales to increase about 9% in the current quarter, according to Factset.

"We're investing in future capacities so that we're better equipped to meet the demand in future surges, hopefully, and we expect to be in a much better shape with substantial improvements this summer," Dorer said.

Clorox shares grew 3.4% to $192.71 coming off the company's earning report. The stock is up more than 25% this year.

VIDEO9:4309:43
Clorox CEO discusses Q3 earnings, cleaning supply production amid coronaviurs

Disclosure: Cramer's charitable trust owns shares of Clorox.

Correction: This story was updated with the correct spelling of the CEO.

Questions for Cramer?
Call Cramer: 1-800-743-CNBC

Want to take a deep dive into Cramer's world? Hit him up!
Mad Money Twitter - Jim Cramer Twitter - Facebook - Instagram

Questions, comments, suggestions for the "Mad Money" website? madcap@cnbc.com