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Kenvue Inc. (KVUE)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 delivered mixed results: Net sales declined 4.0% year-over-year to $3.839B, while adjusted diluted EPS was $0.29; management cut full-year guidance and emphasized execution under a new interim CEO and CFO .
  • Versus consensus, EPS modestly beat and revenue slightly missed: EPS $0.29 vs $0.284*, Revenue $3.839B vs $3.853B*, driven by weak allergy and sun seasons, inventory fluctuations, and shipment timing in China; strategic price investments reduced price/mix by 0.9% .
  • Guidance reset: FY25 net sales and organic sales now expected down low-single-digits, adjusted operating margin to decline YoY, and adjusted diluted EPS $1.00–$1.05 (including a low-single-digit FX headwind) .
  • Catalysts: ongoing strategic alternatives review, leadership changes (Interim CEO Kirk Perry; CFO Amit Banati), and a dividend increase to $0.2075 per share (+1.2%) .

Values with * are from S&P Global consensus estimates.

What Went Well and What Went Wrong

What Went Well

  • Adjusted EPS improved sequentially: $0.29 in Q2 vs $0.24 in Q1, supported by savings from “Our Vue Forward” and phasing of brand support .
  • Operating leverage improved YoY on GAAP: operating margin rose to 18.0% from 3.9% due to lapping prior-year non-cash impairments .
  • Management emphasis on execution and portfolio optimization: “We are actively focused on improving execution and performance…to accelerate profitable growth” — Interim CEO Kirk Perry .

What Went Wrong

  • Top-line softness: Organic sales down 4.2% with volume -3.3% and price/mix -0.9%, reflecting weak allergy and sun seasons in North America, inventory fluctuations, and shipment timing in China .
  • Margin headwinds: Adjusted gross margin declined 70 bps YoY to 60.9% on unfavorable mix, FX, inflation, and strategic price investments .
  • Outlook lowered: FY25 net sales and organic sales now down low-single-digits and adjusted operating margin to decline YoY; adjusted EPS cut to $1.00–$1.05 .

Financial Results

Quarterly Financials vs Prior Periods and Consensus

MetricQ4 2024 (Dec 29, 2024)Q1 2025 (Mar 30, 2025)Q2 2025 (Jun 29, 2025)Q2 2025 ConsensusNotes
Net Sales ($USD Billions)$3.662 $3.741 $3.839 $3.853*Slight miss vs consensus
Diluted EPS ($)$0.15 $0.17 $0.22 —GAAP EPS improved
Adjusted Diluted EPS ($)$0.26 $0.24 $0.29 $0.284*Modest beat
Gross Margin (%)56.5% 58.0% 58.9% —Sequential improvement
Adjusted Gross Margin (%)58.7% 60.0% 60.9% —Down 70 bps YoY
Operating Margin (%)13.2% 14.9% 18.0% —Lapped impairments
Adjusted Operating Margin (%)19.2% 19.8% 22.7% —Slightly down YoY

Values with * are from S&P Global consensus estimates.

Segment Net Sales and Adjusted Operating Income (Q2 2025 vs Q2 2024)

SegmentNet Sales Q2 2025 ($MM)Net Sales Q2 2024 ($MM)YoY ChangeAdjusted Op Inc Q2 2025 ($MM)Adjusted Op Inc Q2 2024 ($MM)
Self Care$1,555 $1,635 -4.9% $527 $534
Skin Health & Beauty$1,059 $1,103 -4.0% $149 $165
Essential Health$1,225 $1,262 -2.9% $351 $359
Total$3,839 $4,000 -4.0% $1,027 $1,058

Organic Sales Drivers (Q2 2025 YoY)

SegmentOrganic Sales Change (%)Price/Mix (%)Volume (%)
Self Care-5.9% -0.1% -5.8%
Skin Health & Beauty-3.7% -2.3% -1.4%
Essential Health-2.4% -0.6% -1.8%
Total-4.2% -0.9% -3.3%

KPIs and Operating Details

KPIQ1 2025Q2 2025
Interest Expense, net ($MM)$94 $94
Effective Tax Rate (%)29.7% 28.6%
Adjusted Effective Tax Rate (%)27.5% 26.9%
R&D Expense ($MM)$99 $91
Free Cash Flow (YTD, $B)$0.2 (Q1 only) $0.8 (six months)

GAAP-to-Non-GAAP Adjustments (Q2 2025)

  • Adjusted operating income reconciled from $692MM GAAP with $178MM of adjustments: amortization of intangibles $64MM, restructuring $60MM, operating model optimization $8MM, separation-related $30MM, Deferred Markets impacts and tax effects; yielding adjusted operating income $870MM and adjusted operating margin 22.7% .
  • Adjusted diluted EPS: $0.22 GAAP plus net adjustments (e.g., restructuring $0.04, amortization $0.03, separation $0.01, tax impact -$0.01) to $0.29 .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Net Sales (YoY)FY 2025-1% to +1% (with ~3% FX headwind) Down low-single-digits; ~neutral FX Lowered
Organic Sales (YoY)FY 2025+2% to +4% Down low-single-digits Lowered
Adjusted Operating Income MarginFY 2025Improvement YoY Decline YoY Lowered
Adjusted Diluted EPS ($)FY 2025Flat to +2% YoY (mid-single-digit FX headwind) $1.00–$1.05 (low-single-digit FX headwind) Lowered
Effective Tax Rate (GAAP)FY 202528.0%–29.0% 28.5%–29.5% Slightly raised midpoint
Adjusted Effective Tax RateFY 202525.5%–26.5% 25.5%–26.5% Maintained
DividendQ3 2025 Payable$0.205 per share prior$0.2075 per share (+1.2%) Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024, Q1 2025)Current Period (Q2 2025)Trend
AI/Technology InitiativesAnnounced five-year Microsoft collaboration to scale Azure AI across operations (Apr 16, 2025) Appointed new Chief Technology & Data Officer (effective Aug 25, 2025) Building digital & data capabilities
Supply Chain/ProductivityGlobal supply chain efficiency drove FY24 gross margin gains Productivity gains partially offset inflation/FX; continued optimization initiatives Ongoing efficiencies, offset by macro headwinds
Tariffs/MacroFY25 outlook initially excluded tariffs; then updated for incremental tariff costs and FX (Q1) Guidance embeds tariffs and FX impacts; net sales/organic sales lowered Worsening external drag
Product Performance/SeasonalityQ4: weak cold/cough & flu impacted pediatric pain; APAC disruptions Weak allergy and sun seasons in NA; inventory fluctuations; China shipment timing Seasonality and channel timing pressures
Regional TrendsQ4: APAC go-to-market disruption EMEA growth YoY; APAC down YoY; China shipment timing noted Mixed regional performance
Strategic ReviewFocus on shareholder value; separation execution Strategic alternatives review advancing; potential brand portfolio optimization Active portfolio and strategic options

Management Commentary

  • “We are actively focused on improving execution and performance, while advancing the comprehensive strategic alternatives review, to deliver our inherent value” — Kirk Perry, Interim CEO .
  • “We are adjusting our outlook for 2025…While current results do not reflect the Company’s full potential, I am confident that we are taking the appropriate actions to deliver sustainable value” — Amit Banati, CFO .
  • Leadership updates: Kirk Perry appointed Interim CEO (effective July 14, 2025); new APAC Group President; new Chief Technology & Data Officer announced .

Q&A Highlights

  • The full Q2 2025 earnings call transcript could not be retrieved due to a document issue; Q&A details will be updated once accessible. Webcast logistics are available (Aug 7, 2025, 8:30 a.m. ET) .

Estimates Context

  • EPS: Actual $0.29 vs consensus $0.284*; modest beat amid margin phasing and productivity savings .
  • Revenue: Actual $3.839B vs consensus $3.853B*; slight miss driven by seasonality, inventory, and China shipment timing .
  • Implications: Street likely lowers FY25 revenue and margin assumptions in line with guidance reset; adjusted EPS range $1.00–$1.05 frames downside vs prior “flat to +2%” outlook .

Values marked with * retrieved from S&P Global.

Actual vs Consensus (Q2 2025)

MetricActualConsensusDelta
Revenue ($USD Billions)$3.839 $3.853*-$0.014
Adjusted Diluted EPS ($)$0.29 $0.284*+$0.006

Values with * are from S&P Global consensus estimates.

Key Takeaways for Investors

  • Guidance reset is the key narrative: FY25 net sales/organic sales now down low-single-digits, adjusted operating margin to decline, EPS cut to $1.00–$1.05 — expect estimate revisions and potential multiple compression until execution improves .
  • Near-term top-line visibility is challenged by seasonality and channel dynamics (inventory/shipment timing), particularly in North America and China; watch Self Care volume trends into fall/winter .
  • Margin trajectory supported by productivity and “Our Vue Forward,” but unfavorable mix, inflation, FX, and strategic price investments are meaningful offsets — monitor gross margin stabilization vs Q2 levels .
  • Strategic alternatives review and portfolio optimization are potential upside catalysts; leadership changes (Interim CEO, new CFO, new CTO) signal operational focus and possible portfolio actions .
  • Dividend increase (+1.2%) underscores commitment to capital returns despite lowered outlook; balance sheet shows $1.1B cash and $8.6B debt (net debt ~$7.5B) — maintain watch on leverage vs cash generation .
  • Trading lens: Expect near-term volatility tied to estimate cuts and strategic review headlines; positioning may favor a wait-and-see into seasonally stronger Self Care period and potential strategic actions .
  • Medium-term thesis: Execution on productivity/digital investments (Microsoft partnership, new CTO) and portfolio optimization could re-rate margins and growth; proof points needed in H2 2025 .