Clorox CEO: Economic Recovery To Be Slow

Clorox Co. (CLX) Chairman and Chief Executive Don Knauss said he expects the economic recovery to be slow and hard-earned.

In an interview with Dow Jones Newswires on Thursday at the company's analyst conference, Knauss described the recession taking the shape of an elongated "W," with an initial uptick in consumer spending from government stimulus in the near-term, followed by a dip once those funds are exhausted, then a leveling off.

"It's going to be a long, slow ride out of this thing," he said.

Knauss sees Clorox as well-positioned amid the recession, describing 90% of its products - which include everything from Pine-Sol house cleaner to Fresh Step kitty litter - as basic needs, with only 10% as "discretionary wants."

Items such as Clorox's Kingsford charcoal have especially benefitted, he said, as consumers have preferred to stay closer to home in tougher times.

Still, the company has seen some pullback in the robust growth of its natural care products, such as Green Works and Burt's Bees. However, Clorox management expressed confidence about the category's long-term growth prospects at the analyst meeting, adding it plans to increase advertising spend on lines such as Burt's Bees next year.

Clorox also said it would start selling Green Works laundry detergent and stain remover next month.

In the interview Thursday, Knauss said Clorox is seeing a bit less pressure from most commodity costs, as many inputs, such as resin, have fallen from their highs.

Clorox said in its analyst meeting it should see a $100 million benefit from those easing commodity costs in fiscal 2010, after experiencing years of pressure.

Notably, Clorox said it doesn't expect to take any further price cuts, after it took two rollbacks on its Glad trash bags in recent months.

"We've done a good job of going back to retailers and explaining how our recent pricing actions have been justified," Knauss said.

He noted Clorox has been able to recoup only about 60% of the roughly $600 million it has had to absorb in commodity costs in recent years through pricing actions, with the rest coming from cost-savings initiatives.

Also Thursday, Clorox backed its fiscal 2010 guidance and boosted its quarterly dividend 8.7% to 50 cents a share, in a move investors and analysts had been counting on. The company sees future margins rising more than expected on cost savings.

Shares of Clorox were recently trading up less than 1% at $53.81.

-By Kelly Nolan; Dow Jones Newswires; 201-938-4049; [e-mail]