Financial Data and Key Metrics Changes - The company reported a 4.2% decline in organic sales for Q2, which was below expectations, despite global consumption growing year over year [25][34] - Adjusted operating margin contracted by 10 basis points to 22.7%, with adjusted diluted EPS at $0.29 compared to $0.32 in the previous year [35][45] - Adjusted net income for Q2 was $560 million, reflecting an 8.3% decline year over year [45] Business Line Data and Key Metrics Changes - The Self Care business experienced a 5.9% decline in organic sales, primarily due to lower volumes and unfavorable seasonal dynamics [37] - Skin Health and Beauty saw a 3.7% decrease in organic sales, with consumption trends stabilizing globally for the first time in over a year [39][40] - Essential Health reported a 2.4% decline in organic sales, with challenges in the mouthwash business despite gaining share online [42][43] Market Data and Key Metrics Changes - In the U.S., 83% of the business held or gained market share, with notable performance in allergy products like Zyrtec [25][38] - Consumption trends improved sequentially in EMEA and Latin America, while North America and Asia Pacific faced challenges [40][72] - The allergy category in the U.S. recorded the second lowest incidences on record, impacting sales negatively [37] Company Strategy and Development Direction - The company is focusing on reducing complexity by streamlining its brand portfolio and prioritizing key markets and products [21][22] - A strategic review committee has been established to explore various alternatives for optimizing the brand portfolio [12] - The leadership aims to enhance operational efficiency and improve execution across major brands and markets [24][48] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the need for a consumer-centric approach and emphasized the importance of household penetration to drive market share [15][16] - The company revised its guidance for 2025, expecting organic sales to decline in low single digits due to current performance and market dynamics [46] - Management expressed confidence in the potential for turnaround, citing strong brand equity and a robust innovation pipeline [30][70] Other Important Information - The company has appointed new leaders to enhance capabilities in marketing, sales, digital, and AI [20][85] - A focus on flawless execution and faster decision-making is emphasized as critical to achieving growth [51][88] Q&A Session Summary Question: Discussion on complexity and focus on major brands - Management agreed on the need to focus on major brands and markets, acknowledging the complexity created within the organization [56][57] Question: Surprises upon stepping into the role and areas of excitement - Management noted surprise at the self-induced complexity and expressed excitement about the potential in EMEA and Latin America [68][72] Question: Framework for unlocking value and addressing low profitability segments - Management confirmed that strategic alternatives and operational excellence efforts are aligned, focusing on consumer understanding and demand creation [78][80] Question: Measuring success in restructuring efforts - Management stated that success will be measured by consumer purchasing behavior and sequential improvement in market share [84][88]

Earnings Performance - Kenvue reported quarterly earnings of $0.29 per share, exceeding the Zacks Consensus Estimate of $0.28 per share, but down from $0.32 per share a year ago, representing an earnings surprise of +3.57% [1] - The company posted revenues of $3.84 billion for the quarter ended June 2025, missing the Zacks Consensus Estimate by 0.51% and down from $4 billion year-over-year [2] Market Performance - Kenvue shares have increased by approximately 0.4% since the beginning of the year, while the S&P 500 has gained 7.9% [3] - The stock is currently rated Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Future Outlook - The current consensus EPS estimate for the upcoming quarter is $0.31 on revenues of $4.01 billion, and for the current fiscal year, it is $1.11 on revenues of $15.52 billion [7] - The outlook for the Consumer Products - Staples industry is unfavorable, ranking in the bottom 26% of over 250 Zacks industries, which may impact Kenvue's stock performance [8]

Financial Performance - Q2 2025 - Net sales declined by 40% year-over-year, reaching $38 billion in Q2 2025, compared to $40 billion in Q2 2024[27] - Organic sales decreased by 42% compared to the previous year[26] - Adjusted gross profit margin was 609%, a decrease of 70 basis points year-over-year[26, 46] - Adjusted operating income margin was 227%, a decrease of 10 basis points year-over-year[26, 46] - Adjusted diluted earnings per share were $029[26] Segment Performance - Q2 2025 - Self Care net sales were $16 billion, with a 49% reported decrease and a 59% organic sales decrease[28] - Skin Health & Beauty net sales were $11 billion, with a 40% reported decrease and a 37% organic sales decrease[33] - Essential Health net sales were $12 billion, with a 29% reported decrease and a 24% organic sales decrease[40] 2025 Outlook - The company updated its 2025 outlook, projecting a decrease in reported net sales growth in the low single digits (LSD)[23, 49] - Organic sales growth is also expected to decrease in the low single digits[49] - Adjusted diluted earnings per share are projected to be in the range of $100 to $105, assuming a full-year diluted weighted average share count of 193 billion[49] Strategic Initiatives - The Kenvue Board is undertaking a comprehensive review of strategic alternatives to unlock shareholder value[14, 57] - New leadership is focused on bolstering leadership & capabilities, reviewing operating strategy, improving execution, and optimizing structure & operating model[57]

Core Insights - Kenvue (NYSE: KVUE) has seen a recent stock price increase of 21%, aligning with broader market gains, but current valuations indicate limited investment appeal due to fundamental weaknesses [2][10] - The company became independent in May 2023 after spinning off from Johnson & Johnson's consumer health division, now operating as a standalone entity in a competitive market [3] Valuation Analysis - Kenvue is trading at a premium compared to the overall market, with a Price-to-Earnings (P/E) ratio of 40.7x versus the S&P 500's 22.8x, and a Price-to-Free Cash Flow (P/FCF) of 29.6x compared to 20.6x for the S&P 500 [6][10] - The Price-to-Sales (P/S) ratio stands at 2.8x, slightly below the S&P 500's 3.0x, indicating a mixed valuation picture [6] Growth Performance - Kenvue's three-year average revenue growth is only 0.3%, significantly lower than the S&P 500's 5.2% [7] - The company experienced a 12-month revenue decline of 1.2%, while the S&P 500 grew by 4.4% during the same period [7][8] - Q1 revenues fell by 3.9% year-over-year to $3.7 billion, contrasting with a 4.1% growth in the broader market [12] Profitability Assessment - Kenvue's net income margin is 6.9%, trailing the S&P 500's 12.0%, indicating potential issues with high interest costs or tax liabilities [13] - Operating and net margins are consistently below market standards, reflecting mediocre profitability metrics [9][13] Financial Stability - Kenvue maintains a debt-to-equity ratio of 20.6%, which is favorable compared to the S&P 500's 24.0%, with total debt of $8.9 billion manageable against a market capitalization of $42 billion [13] - The cash-to-assets ratio is 4.0%, below the S&P 500's 6.7%, suggesting liquidity is sufficient but not robust [13] Investment Conclusion - The combination of high valuation and weak operational fundamentals makes Kenvue an unattractive investment opportunity at current levels [10] - Investors may consider waiting for a more favorable entry point or exploring alternatives with stronger growth prospects and more reasonable valuations [10]

Core Viewpoint - Kenvue, a spinoff from Johnson & Johnson, is positioned as a high-yield dividend stock despite facing challenges in growth and competition from private-label brands [4][11][14] Company Overview - Kenvue was spun off from Johnson & Johnson in August 2023 to allow J&J to focus on higher growth segments [4] - The company includes well-known brands in various categories such as pain relief, allergy, skin care, oral health, baby care, digestive health, and wound care [5] Financial Performance - Kenvue's net sales and operating margins have been declining due to inflationary pressures and reduced consumer spending [4] - The company aims to achieve $350 million in annualized savings by 2026 through its Vue Forward initiative [6] - Kenvue's forward price-to-earnings ratio is 18.8, and its dividend yield is 3.9%, indicating it is a good value stock [11] Marketing and Brand Strategy - Kenvue has launched marketing campaigns targeting Gen Z consumers, but these efforts have not yet resulted in significant financial improvements [7] - The company has a global presence, with about half of its net sales coming from North America, which helps mitigate regional pressures [9][10] Competitive Landscape - Kenvue faces competition from private-label brands, which can impact its pricing power [8] - Despite this, Kenvue has not seen a significant shift to private-label products globally, with a slight decrease in private-label penetration in its categories [9] Investment Potential - Kenvue is considered a worthwhile addition for passive-income portfolios due to its strong brand lineup and high dividend yield [13][15] - The stock is currently undervalued, making it an attractive option for investors who believe in the company's long-term potential [14][15]

Group 1 - Proactive provides fast, accessible, informative, and actionable business and finance news content to a global investment audience [2] - The company focuses on medium and small-cap markets while also covering blue-chip companies, commodities, and broader investment stories [3] - Proactive's news team delivers insights across various sectors including biotech, pharma, mining, natural resources, battery metals, oil and gas, crypto, and emerging technologies [3] Group 2 - Proactive is committed to adopting technology to enhance workflows and improve content production [4] - The company utilizes automation and software tools, including generative AI, while ensuring all content is edited and authored by humans [5]

Group 1 - Kenvue Inc has experienced a leadership change, with CEO Thibaut Mongon being fired and Kirk Perry appointed as interim CEO, marking the second executive shakeup this year [1] - The company replaced its CFO Paul Ruh with Amit Banati in May, indicating ongoing restructuring efforts [1] - Kenvue has warned that tariffs could negatively impact its financial performance by up to $150 million [1] Group 2 - Kenvue's stock has risen by 1.4% to $21.64, aiming for a fourth consecutive win, a streak not seen since late April [2] - The stock price increase has brought shares above the year-to-date breakeven mark, with shares now facing the 100-day moving average [2] - Options trading activity has surged, with 17,000 calls and 4,507 puts exchanged, double the average intraday rate, particularly focusing on November 23 and 24 calls [2] Group 3 - Options traders have shown a bullish sentiment towards Kenvue, with a 50-day call/put volume ratio of 37.42, ranking in the 95th percentile of annual readings [3] - Short-term traders also exhibit a call-bias, as indicated by the Schaeffer's put/call open interest ratio (SOIR) of 0.19, which stands in the 2nd percentile of readings from the past year [3]

Core Insights - Kenvue's CEO Thibaut Mongon is leaving the company as it continues its business restructuring efforts [1] - Kirk Perry has been appointed as the interim CEO following Mongon's departure [1] - Kenvue's stock price rose by 6.5% in pre-market trading after the announcement, although the stock has remained flat for the year [1] Company Developments - Kenvue, which was spun off from Johnson & Johnson, has faced pressure from activist investors to change its corporate structure and operations since its IPO in May 2023 [1] - The company appointed Jeffrey Smith, CEO of activist hedge fund Starboard Value, to its board earlier this year to avoid a proxy battle [1] - TOMS Capital Investment Management has also accumulated shares and urged the company to consider a full sale or asset divestiture [1] Strategic Evaluation - The board, led by Chairman Larry Merlo, is conducting a strategic review and considering various potential options, including simplifying the company's business portfolio and operational model [2] - Kenvue reported a 4% decline in net sales for the second quarter, which was worse than analysts' average expectation of a 1.4% decline [2] - Mongon's departure is not attributed to any specific cause, and he will receive severance compensation [2]

[Major Announcements](index=1&type=section&id=Major%20Announcements) Kenvue's Board is implementing actions to unlock shareholder value, including a CEO transition and a strategic review, while reporting preliminary Q2 2025 results [Overview of Key Actions](index=1&type=section&id=Overview%20of%20Key%20Actions) Kenvue's Board is implementing actions to unlock shareholder value, including a CEO transition, a strategic review, and reporting preliminary Q2 2025 financial results - Kenvue's Board is implementing actions to unlock shareholder value and reach its full potential[2](index=2&type=chunk) - Key actions include a CEO transition, an ongoing comprehensive review of strategic alternatives, and reporting select preliminary Second Quarter 2025 financial results[2](index=2&type=chunk)[6](index=6&type=chunk) [Leadership Transition](index=1&type=section&id=Leadership%20Transition) Kenvue's Board appointed Kirk Perry as Interim CEO, effective immediately, following Thibaut Mongon's departure, and initiated a search for a permanent CEO [Interim CEO Appointment](index=1&type=section&id=Interim%20CEO%20Appointment) Kirk Perry, a Kenvue director, has been appointed Interim CEO, effective immediately, as Thibaut Mongon departs; a search for a new CEO is underway - Mr. Kirk Perry, a current Kenvue director and seasoned consumer products and brand strategist, has been appointed Interim Chief Executive Officer, effective immediately[4](index=4&type=chunk)[6](index=6&type=chunk) - Mr. Thibaut Mongon has departed the Company and stepped down from the Kenvue Board[4](index=4&type=chunk) - Heidrick & Struggles is assisting in the search for the Company's next Chief Executive Officer[4](index=4&type=chunk) [Strategic Review](index=2&type=section&id=Strategic%20Review) Kenvue's Board initiated a comprehensive strategic review to optimize its brand portfolio, improve execution, and accelerate profitable growth [Purpose and Scope of Strategic Review](index=2&type=section&id=Purpose%20and%20Scope%20of%20Strategic%20Review) Kenvue's Board initiated a comprehensive strategic review to optimize its brand portfolio, improve execution, and enhance operating performance - The Board initiated a comprehensive review of strategic alternatives and established a Strategic Review Committee to oversee the process[7](index=7&type=chunk) - The strategic review will consider optimizing the Company's brand portfolio, improving execution, and enhancing operating performance to accelerate profitable growth and unlock value[7](index=7&type=chunk) [Advisors for Strategic Review](index=2&type=section&id=Advisors%20for%20Strategic%20Review) Centerview Partners and McKinsey & Company are advising Kenvue's Board on the strategic review, with updates planned for shareholders - Centerview Partners and McKinsey & Company are advising the Board and the Strategic Review Committee[8](index=8&type=chunk) - The Company plans to update shareholders as the strategic review progresses[8](index=8&type=chunk) [Preliminary Second Quarter 2025 Financial Results](index=2&type=section&id=Preliminary%20Second%20Quarter%202025%20Financial%20Results) Kenvue reported preliminary Q2 2025 financial results, showing declines in net and organic sales, with diluted EPS between $0.21 and $0.22 [Key Preliminary Financial Metrics](index=2&type=section&id=Key%20Preliminary%20Financial%20Metrics) Kenvue reported preliminary Q2 2025 results, including a (4.0)% net sales change and diluted EPS of $0.21 to $0.22, with full results due August 7, 2025 Select Preliminary Second Quarter 2025 Financial Results | Metric | Fiscal Three Months Ended June 29, 2025 | | :--- | :--- | | Net sales change | (4.0)% | | Organic sales change | (4.2)% | | Diluted earnings per share | $0.21 to $0.22 | | Adjusted diluted earnings per share | $0.28 to $0.29 | - The Company will report its full second quarter 2025 financial results on August 7, 2025, and will revise its full year 2025 outlook at that time[10](index=10&type=chunk) [Reconciliation of Net Sales to Organic Sales](index=5&type=section&id=Reconciliation%20of%20Net%20Sales%20to%20Organic%20Sales) Preliminary net sales declined by (4.0)%, while organic sales decreased by (4.2)% for Q2 2025, after accounting for currency and M&A impacts Reconciliation of Preliminary Net Sales to Organic Sales (Fiscal Three Months Ended June 29, 2025 vs June 30, 2024) | Metric | Reported Net Sales Change | Impact of Foreign Currency | Impact of Acquisitions and Divestitures | Total Organic Sales Change | | :--- | :--- | :--- | :--- | :--- | | Total | (4.0)% | 0.3% | (0.1)% | (4.2)% | [Reconciliation of Net Income to Adjusted Net Income](index=5&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20Net%20Income) Preliminary Net Income for the fiscal three months ended June 29, 2025, was in the range of $396 million to $428 million, with Adjusted Net Income between $536 million and $568 million Reconciliation of Preliminary Net Income to Adjusted Net Income (Fiscal Three Months Ended June 29, 2025) | Metric | Amount (Millions) | | :--- | :--- | | Net Income | $396 — $428 | | Adjustments: | | | Amortization of intangible assets | 64 | | Restructuring expenses and operating model optimization initiatives | 68 | | Separation-related costs | 24 | | Tax impact on special item adjustments | (28) | | Other | 12 | | **Adjusted net income (non-GAAP)** | **$536 — $568** | [Reconciliation of Diluted EPS to Adjusted Diluted EPS](index=5&type=section&id=Reconciliation%20of%20Diluted%20EPS%20to%20Adjusted%20Diluted%20EPS) Preliminary Diluted EPS for the fiscal three months ended June 29, 2025, was $0.21 to $0.22, while Adjusted Diluted EPS was $0.28 to $0.29 after specific adjustments Reconciliation of Preliminary Diluted EPS to Adjusted Diluted EPS (Fiscal Three Months Ended June 29, 2025) | Metric | Amount | | :--- | :--- | | Diluted earnings per share | $0.21 — $0.22 | | Adjustments: | | | Amortization of intangible assets | 0.03 | | Restructuring expenses and operating model optimization initiatives | 0.04 | | Separation-related costs | 0.01 | | Tax impact on special item adjustments | (0.01) | | **Adjusted diluted earnings per share (non-GAAP)** | **$0.28 — $0.29** | [Company Information](index=2&type=section&id=Company%20Information) This section provides the biography of Interim CEO Kirk Perry and an overview of Kenvue as the world's largest pure-play consumer health company [Biography of Interim CEO Kirk Perry](index=2&type=section&id=Biography%20of%20Interim%20CEO%20Kirk%20Perry) Kirk Perry, Interim CEO, joined Kenvue's Board in December 2024, bringing over 30 years of experience in consumer-packaged goods and technology - Kirk Perry joined Kenvue's Board of Directors in December 2024[12](index=12&type=chunk) - He has over 30 years of experience in global consumer-packaged goods, technology, and business transformation[12](index=12&type=chunk) - Prior roles include President and CEO of Circana (and IRI), President, Global Client and Agency Solutions at Google, and various leadership positions at Procter & Gamble[12](index=12&type=chunk) [About Kenvue](index=2&type=section&id=About%20Kenvue) Kenvue is the world's largest pure-play consumer health company, featuring iconic, science-backed brands like Aveeno® and Tylenol® - Kenvue is the world's largest pure-play consumer health company by revenue[13](index=13&type=chunk) - Its iconic brands include Aveeno®, BAND-AID® Brand, Johnson's®, Listerine®, Neutrogena® and Tylenol®, which are science-backed and recommended by healthcare professionals[13](index=13&type=chunk) [Non-GAAP Financial Measures](index=3&type=section&id=Non-GAAP%20Financial%20Measures) Kenvue uses non-GAAP financial measures to provide a clearer understanding of operating performance and facilitate comparisons, despite their limitations [Explanation and Use](index=3&type=section&id=Explanation%20and%20Use) Kenvue uses non-GAAP financial measures to supplement U.S. GAAP results, offering investors a clearer view of operating performance and comparisons - The Company uses non-GAAP financial measures to supplement U.S. GAAP, acknowledging their limitations and lack of standardization[14](index=14&type=chunk) - These measures are considered relevant and useful for investors to view performance similarly to management and to compare results with other companies[15](index=15&type=chunk) [Definition of Adjusted Diluted Earnings Per Share](index=3&type=section&id=Definition%20of%20Adjusted%20Diluted%20Earnings%20Per%20Share) Adjusted diluted EPS is Adjusted net income divided by diluted shares outstanding, serving as a supplemental measure of company performance - Adjusted diluted earnings per share is defined as Adjusted net income divided by the weighted average number of diluted shares outstanding[16](index=16&type=chunk) - Management views this as a useful supplemental measure of the Company's performance over time[16](index=16&type=chunk) [Definition of Adjusted Net Income](index=3&type=section&id=Definition%20of%20Adjusted%20Net%20Income) Adjusted net income is U.S. GAAP Net income adjusted for specific items like amortization and restructuring to clarify underlying performance trends - Adjusted net income is U.S. GAAP Net income adjusted for amortization of intangible assets, restructuring expenses, operating model optimization initiatives, separation-related costs, and other adjustments, along with their related tax impacts[17](index=17&type=chunk) - This measure excludes the impact of items that may obscure trends in underlying performance and is used for strategic decision making, forecasting, and evaluating current performance[17](index=17&type=chunk) [Definition of Organic Sales](index=3&type=section&id=Definition%20of%20Organic%20Sales) Organic sales are U.S. GAAP Net sales excluding foreign currency and M&A impacts, providing insight into core operational changes - Organic sales are defined as U.S. GAAP Net sales excluding the impact of changes in foreign currency exchange rates and the impact of acquisitions and divestitures[18](index=18&type=chunk) - This measure provides supplemental information useful in assessing the Company's results of operations by excluding items that do not directly reflect underlying operations[18](index=18&type=chunk) [Legal and Financial Disclosures](index=4&type=section&id=Legal%20and%20Financial%20Disclosures) This section provides cautions regarding forward-looking statements and advises that all presented financial data is preliminary and subject to change [Cautions Concerning Forward-Looking Statements](index=4&type=section&id=Cautions%20Concerning%20Forward-Looking%20Statements) The press release contains forward-looking statements subject to risks and uncertainties, and actual results may differ materially - The press release contains forward-looking statements subject to risks and uncertainties, and actual results could differ materially[19](index=19&type=chunk) - Risks include inability to execute business strategy, inflation, economic factors, competition, challenges in R&D, and the outcome of the strategic review process[19](index=19&type=chunk) - The Company undertakes no obligation to publicly update or revise any forward-looking statements[19](index=19&type=chunk) [Financial Disclosure Advisory](index=4&type=section&id=Financial%20Disclosure%20Advisory) All financial data presented is preliminary and subject to change upon completion of normal quarter-end accounting procedures and adjustments - All financial data in this press release is preliminary and represents the most current information available to management[20](index=20&type=chunk) - These estimates are not a comprehensive statement of financial results and actual results may differ upon completion of normal quarter-end accounting procedures[20](index=20&type=chunk) [Additional Information](index=5&type=section&id=Additional%20Information) This section provides contact information for Kenvue's Investor Relations and Media Relations departments for inquiries [Investor and Media Contacts](index=5&type=section&id=Investor%20and%20Media%20Contacts) Contact information for Kenvue's Investor Relations, handled by Sofya Tsinis, and Media Relations, handled by Melissa Witt, is provided for inquiries - Investor Relations contact: Sofya Tsinis (Kenvue_IR@kenvue.com)[22](index=22&type=chunk) - Media Relations contact: Melissa Witt (media@kenvue.com)[22](index=22&type=chunk)

Core Viewpoint - A wave of brand sell-offs is sweeping through the beauty industry, driven by major companies facing performance pressures and a need to restructure their brand portfolios [2][3][6]. Group 1: Brand Sell-Offs - Coty is reportedly exploring the sale of several brands, including Gucci and Burberry, amidst market speculation [2]. - Kenvue, a spinoff from Johnson & Johnson, is also rumored to be considering the sale of its skin health and beauty division, with an estimated transaction value exceeding $500 million (approximately 3.59 billion RMB) [2]. - Natura & Co has been linked to ongoing rumors about selling Avon since last year, highlighting a broader trend of divestitures among beauty giants [2][3]. Group 2: Market Reactions - Despite the sell-off rumors, Coty's stock surged by 13% in a single day, reaching a three-month high, indicating a positive market reaction to the restructuring news [3]. - The performance pressures faced by these companies are evident, with Coty's mass beauty segment reporting a 9% decline in net revenue to $470 million (approximately 3.4 billion RMB) in Q3 of fiscal 2025 [8]. Group 3: Industry Trends - The beauty industry is experiencing a significant contraction, with Kenvue's skin health and beauty division reporting a 7.3% year-over-year sales decline in Q1 2025, the largest drop among its business segments [6]. - The Chinese market is reshaping the competitive landscape, with domestic brands capturing a growing market share, accounting for 55.2% of total sales in 2024, up 2.9 percentage points year-over-year [11][24]. Group 4: Strategic Shifts - Major beauty companies are shifting from aggressive acquisition strategies to a focus on efficiency and value, as evidenced by their divestiture of underperforming brands [19][21]. - The trend reflects a broader industry consensus that emphasizes streamlining brand portfolios and concentrating on core assets to enhance competitiveness [19][26]. Group 5: Future Outlook - The ongoing sell-off trend is expected to continue as companies adapt to the compressed industry cycle and intensifying competition [26]. - The future of the beauty industry will likely revolve around establishing competitive advantages in areas such as cutting-edge biotechnology, unique ingredients, and robust consumer data operations [26].