One of the key strategies for The Clorox Company’s solid growth till date has been its ability to diversify its brand portfolio. The latest addition to Clorox’s list of brands is Nutranext, a health and wellness company, brought under its wings through a $700 million acquisition to expand its dietary supplements business.
Clorox’s focus on the dietary supplement business shows that the company is hell-bent on taking advantage of this booming market, which is expected to reach $278.02 billion by 2024 – as per a report by Grand View Research. The consumer products maker hopes to complete the acquisition of Nutranext in the fourth quarter of this fiscal year.
Clorox, which is known for brands like Burt’s Bees, Hidden Valley, and Kingsford, expects Nutranext to dilute earnings per share by 7 -11 cents in the fourth quarter. Prior this, the company had spent $295 million to acquire Renew Life – a digestive health company.
The latest addition to Clorox’s list of brands is Nutranext, a health and wellness company
Despite the stiff competition from rivals like Procter & Gamble, Clorox manages to grow by increasing its investments in leading brands that have attractive margins. The investments indicate that the company is on track with regard to its 2020 strategy execution. The strategy, introduced to drive long-term growth, includes increasing net sales by 3-5% and generating free cash flow of 10-12% of sales on a yearly basis.
Also, pharma giants Pfizer and Merck are currently planning to sell their consumer healthcare business. If that takes off, it could end up as a great opportunity for Clorox.
Clorox has a well-organized capital allocation strategy. The company invests heavily to expand its business and the excess cash is used to lower debts and boost shareholders returns through both dividends and share repurchases.