MW Band-Aid, Tylenol parent's sales miss the mark amid weakness in skin health

By Tomi Kilgore

Profit tops expectations, but stock takes a hit as full-year sales growth outlook is trimmed

Shares of Kenvue Inc. leaned lower Thursday, after the consumer-health company, with brands including Band-Aid, Tylenol and Neutrogena, reported third-quarter sales that fell shy of expectations amid weakness in its skin health and beauty product lines.

While the company topped quarterly profit expectations and said it was seeing "early signs of recovery" in skin health and beauty, the full-year outlook for sales growth was trimmed.

The stock (KVUE) slipped 0.4% in premarket trading.

Net income for the quarter to Sept. 29 fell to $383 million, or 20 cents a share, from $438 million, or 23 cents a share, in the same period a year ago.

Excluding nonrecurring items, such as costs related to the company's separation from Johnson & Johnson $(JNJ)$ completed in August 2023, adjusted earnings per share of 28 cents was above the FactSet consensus of 27 cents.

Net sales slipped 0.4% to $3.899, just shy of the FactSet consensus of $3.920 billion, as a 1.6% decline in volume offset a 2.5% increase in price and mix.

Skin health and beauty sales fell 4.2%, with volume down 4.7%, while essential health sales rose 1.6% and self-care sales grew 0.7%.

The company's skin-health brands include Neutrogena, Aveeno, Rogaine, Clean & Clear and Lubriderm.

Cost of sales fell more than sales, down 2.9% to $1.62 billion, which lifted gross margin to 58.5% from 57.5%.

For the full year, the company said it expects sales growth "toward the low end" of the previously provided guidance range of 1% to 3%, but still expects adjusted EPS of $1.10 to $1.20.

The stock has gained 4.5% year to date through Wednesday, while the S&P 500 has run up 24.3%.

-Tomi Kilgore

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November 07, 2024 08:49 ET (13:49 GMT)

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