Band-Aid Maker Kenvue Cuts Workforce By 4%, Q1 Earnings Beat Street Expectations

Zinger Key Points
  • Kenvue targets annualized pre-tax gross cost savings of around $350 million by 2026 after workforce reduction of 4%.
  • Kenvue expects the full year 2024 reported net sales growth of 1.0%-3.0%, with organic growth of 2.0% to 4.0%.

Pure-play consumer health company Kenvue Inc KVUE reported first-quarter sales of $3.89 billion, beating the consensus of $3.79 billion.

Kenvue’s some of the iconic brands include Aveeno, BAND-AID Brand, Johnson’s, Listerine, Neutrogena, and Tylenol.

Sales increased 1.1%, up from 7.3% in the prior year period. Organic growth was 1.9%, up from 11.2% in the prior year.

Increases in net sales and organic growth were primarily driven by sustained momentum in Self Care on strong consumer demand and growth in Essential Health led by Oral Care, partially offset by underperformance in Skin Health and Beauty.

Net sales and organic growth comprised +5.0% value realization and (3.1%) volume.  

The self-care segment recorded $1.70 billion in net sales, up 3.5% year over year, with the skin health and beauty segment recording a 5% drop in first-quarter net sales to $1.05 billion. Essential Health segment sales increased around 4% to $1.14 billion.

The company reported adjusted EPS of $0.28, down from $0.37 a year ago, beating the consensus of $0.26.

Kenvue will reduce its current global workforce by approximately 4% and targets annualized pre-tax gross cost savings of approximately $350 million by 2026.

The company expects to incur approximately $275 million of pre-tax restructuring costs in fiscal year 2024 and fiscal year 2025.

The first quarter adjusted gross profit margin was 60.2% vs. 57.3% in the prior year. Margin expansion of 290 basis points was primarily driven by value realization, continued global supply chain efficiency initiatives, and easing net input cost inflation.  

The adjusted operating income margin was 22.0% vs. 21.3% in the prior year.  

Guidance: Kenvue expects full-year 2024 reported net sales growth of 1.0%- 3.0%, with organic growth of 2.0% to 4.0%.  

Kenvue expects full-year 2024 adjusted EPS of $1.10-$1.20 versus consensus of $1.15.

Price Action: KVUE shares are up 4.95% at $20.03 at last check Tuesday.

Photo by Colleen Michaels via Shutterstock

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