Clorox, known for its cleaning and personal care products, has reported that it has experienced unauthorized activity, leading to the disruption of some of its business operations.
As a response, the company has taken certain systems offline and is working diligently to implement workarounds for affected offline operations. Clorox is committed to ensuring that its customer services continue uninterrupted despite the incident.
To address the cyber security breach and investigate its implications, Clorox has enlisted the expertise of third-party cybersecurity professionals. This move underscores the company’s commitment to resolving the issue promptly and effectively. In addition to these efforts, Clorox is in close coordination with law enforcement agencies to tackle the situation head-on.
Digital Investment
Clorox in August 2021 announced that the company plans to invest $500 million over a five-year period in transformative technologies and processes.
The investment, which kicked off in the first quarter of the fiscal year 2022, includes a variety of initiatives designed to propel Clorox into the digital age. A significant portion of the budget will be allocated towards the replacement of Clorox’s enterprise resource planning (ERP) system with a more agile and efficient cloud-based platform. This shift is anticipated to optimize operational efficiency and enhance overall productivity.
A notable aspect of this venture is the company’s commitment to embracing a suite of digital technologies. These technologies are expected to cover a wide spectrum of operations, from supply chain management to customer engagement, in a bid to streamline processes and improve customer experiences.
Approximately 65 percent of the $500 million investment is projected to account for incremental operating costs, which will predominantly be recorded under selling and administrative expenses. These costs are essential for the seamless integration of the new technologies and systems and will be used to provide stakeholders with a clear view of adjusted earnings per share (EPS) up to the conclusion of fiscal year 2026.
While the ERP implementation is predicted to be a central component of the technological overhaul, approximately 70 percent of the operating costs are expected to be associated with this process. The remaining costs will be directed towards the implementation of complementary technologies, demonstrating Clorox’s dedication to an all-encompassing technological transformation.
Cyber attack
While Clorox acknowledges the cyber security incident’s occurrence, it has not disclosed the potential impact on its ongoing operations. The cyber attack comes on the heels of Clorox’s recent financial report, in which the company posted a 12 percent increase in sales, reaching a notable $2 billion in the April-June 2023 period. This growth stands in contrast to flat sales reported during the same quarter in the previous year.
The surge in net sales can be attributed primarily to a favorable price mix, although it was somewhat offset by lower volume and unfavorable foreign exchange rates. Furthermore, Clorox has shared that its gross margin witnessed a substantial increase of 560 basis points, climbing to 42.7 percent from 37.1 percent in the corresponding period last year. This improvement can be attributed to pricing strategies and cost-saving initiatives. However, the company also cited challenges such as unfavorable commodity costs and increased manufacturing and logistics expenses.
As the investigation into the cyber attack unfolds, industry analysts and stakeholders are closely watching Clorox’s response to safeguard its operations and customer data. The cyber security incident serves as a stark reminder of the ongoing cybersecurity challenges faced by organizations across various sectors in the modern digital landscape.
