Kenvue Inc. (KVUE), the consumer health company known for its iconic brands like Aveeno, BAND-AID, Johnson’s, Listerine, Neutrogena, and Tylenol, reported mixed third-quarter results. While revenue came in slightly below analysts’ expectations, the company saw positive developments in profitability.
Sales Dip Slightly, But Profitability Rises
Kenvue’s third-quarter sales reached $3.89 billion, representing a 0.4% year-over-year decline (up 0.9% organically). This figure fell short of the consensus estimate of $3.93 billion. The company attributed the sales dip primarily to weakness in the Skin Health and Beauty and Self Care segments. However, the Essential Health segment saw a 1.6% increase in sales.
Despite the sales slowdown, Kenvue demonstrated improved profitability. Adjusted gross profit margin expanded by 130 basis points to 60.7% from 59.4% in the previous year. This expansion was driven by productivity gains resulting from global supply chain efficiency initiatives and the positive impact of pricing strategies.
Strong Performance in Self Care and Essential Health
The self-care segment, which includes popular brands like Tylenol and Listerine, recorded a 0.7% year-over-year increase in net sales, reaching $1.63 billion. The Essential Health segment, encompassing products like Band-Aid and Neutrogena, saw sales rise by 1.6% to $1.20 billion.
Focus on Future Growth
Kenvue’s CEO, Thibaut Mongon, emphasized the company’s commitment to long-term growth. He highlighted the positive impact of their “Our Vue Forward” initiative, which aims to drive productivity and efficiency benefits. These benefits are being reinvested in iconic brands to unlock their full potential. Mongon expressed confidence in the company’s ability to regain momentum in the Skin Health and Beauty segment, citing early signs of recovery.
Outlook and Guidance
For the full year 2024, Kenvue expects net sales growth and organic growth towards the low end of its previously stated outlook of 1.0%-3.0% and 2.0%-4.0%, respectively. The company reaffirmed its adjusted EPS guidance for 2024 at $1.10-$1.20, which is slightly below the consensus estimate of $1.14.
Stock Performance
Following the earnings announcement, KVUE stock gained 3.44%, closing at $23.28 on Thursday.
