Kenvue released its 2023 financial report, showing a 3.3% increase in net sales to $15.4 billion, with organic growth at 5%. Net income declined by 19% to $1.664 billion. Kenvue anticipates a 1.0% to 3.0% increase in net sales for the full year of 2024. Among its three business segments, Self Care sales saw a marginal volume increase of 1.3%, while the other two segments experienced declines in Skin Health and Beauty volume by 4.8% and Essential Health volume by 6%, respectively.
The annual growth rate of net sales is only 3.3%
Kenvue has released its performance for the fourth quarter of 2023 and for the full year of 2023. Net sales for the fourth quarter decreased by 2.7% to $3.7 billion, compared to a 0.9% increase in the same period last year. Organic growth declined by 2.4%, whereas it had increased by 6.2% in the previous year. The decrease in net sales and organic growth includes a 5.8% decrease in value realization and an 8.2% decrease in sales volume.
Around five percentage points of the volume performance can be attributed to specific factors within the fourth quarter of 2023. These include comparisons with the early and robust onset of the cold, cough, and flu season last year, discontinuation of products in 2022, and reductions in customer inventory. The remaining approximately three percentage points of volume performance are primarily due to weaker-than-expected results in the U.S. Skin Health and Beauty segment and ongoing challenges in the Chinese market.
In the full year of 2023, net sales increased by 3.3% to reach $15.4 billion, with organic growth at 5%.
From a business segment perspective, the Self Care segment experienced an organic growth of 8.4%, driven by a 7.1% increase in value realization and a 1.3% growth in volume. It had a robust performance throughout the year, with all product categories showing growth ranging from mid-single digits to low double digits, and witnessing healthy growth across all regions. Growth in the segment was fueled by innovation, supply recovery, and brand activation across product categories and brands like Motrin, Tylenol, Nicorette, and Imodium, which expanded opportunities for consumers to manage their health effectively.
Organic growth in the Skin Health and Beauty segment rose by 1.8%, driven by a 6.6% increase in value realization, partially offset by a 4.8% decline in volume. Sun Care experienced strong growth in key markets throughout 2023, gaining market share due to successful launches of innovative products and a strong presence in retail stores. However, this growth was dampened by underperformance in the commercial U.S. retail execution, particularly noticeable in the fourth quarter.
The Essential Health segment saw organic growth of 3.6%, driven by a 9.6% increase in value realization, although partially offset by a 6.0% decline in volume. The segment saw notable growth in Oral Care, fueled by product innovations such as Listerine® Gum Therapy and clinical claims that garnered increased endorsements from healthcare professionals. Women’s Health also experienced growth in the year, primarily attributed to value realization and brand activation efforts.
Thibaut Mongon, Chief Executive Officer said, “2023 was a transformational year for Kenvue as we began delivering on our long-term value creation algorithm centered around profitable growth, durable cash flow generation, and disciplined capital allocation.”
“We enter 2024 with clear strategic priorities as an independent Kenvue, including strengthened plans in our U.S. Skin Health and Beauty business. Looking ahead we’re focused on reaching more consumers, reinventing our ways of working to invest more in our brands, and fostering a culture that rewards performance and impact in our organization.” Thibaut Mongon added.
Kenvue anticipates that reported net sales growth for the full year 2024 will fall within the range of 1.0% to 3.0%. The company expects foreign exchange to pose a headwind of around one percentage point to reported net sales growth. Moreover, Kenvue forecasts organic growth for the full year 2024 to be between 2.0% and 4.0%, with organic growth improving sequentially as the year progresses due to easing comparisons with the prior year and the implementation of strategic priorities for 2024.
Some of Kenvue’s brands are mired in legal disputes
on Jan 16th, A class action lawsuit was initiated in a United States court against Johnson & Johnson, alleging that the company falsely markets one of its Neutrogena shampoo products as “preservative-free.”
The lawsuit, brought forth by Melissa Gonick in a federal court in New York, claims that J&J inaccurately promotes Neutrogena T/Sal Therapeutic Shampoo despite its inclusion of citric acid, a recognized preservative.
According to reports from Top Class Actions, Gonick asserts that J&J misrepresented the Neutrogena shampoo to exploit consumers’ preference for preservative-free products.
The class action lawsuit against Neutrogena highlights that although the product lists citric acid as an inactive ingredient, it is advertised elsewhere as being free from preservatives. Gonick initiated the Neutrogena class action lawsuit on behalf of herself and other consumers who bought the Neutrogena shampoo advertised as preservative-free.
According to the report, Gonick states that she would not have purchased the Neutrogena shampoo, or would have paid less for it, had she known that Johnson & Johnson falsely marketed the product as preservative-free. The Neutrogena shampoo class action lawsuit alleges violations of New York General Business Law, breach of express warranty, and unjust enrichment.
However, this is not the first time Neutrogena has faced a class action lawsuit.
On July 15th, attorneys specializing in pharmaceutical product safety at the Beasley Allen law firm lodged a federal class-action lawsuit representing consumers who purchased recalled sunscreen products contaminated with benzene, produced by Johnson & Johnson subsidiaries Neutrogena and Aveeno.
The lawsuit aims to obtain an injunction and compensation for consumers who bought various sun-care products from Neutrogena and Aveeno. An examination conducted by the independent laboratory Valisure revealed concerning levels of benzene in at least 78 sun-care products manufactured by Neutrogena, CVS Health, Banana Boat, and other companies.
The FDA allows for trace amounts of benzene in certain critical medical products under rare circumstances; however, benzene is not permitted in any quantity in sun-care products. The National Institute for Occupational Safety and Health (NIOSH) advises the use of protective equipment for individuals anticipating exposure to benzene levels exceeding 0.1 parts per million for 10 hours or 1 ppm for 15 minutes. Valisure’s analysis revealed that some Neutrogena products contained benzene levels exceeding 6 ppm.
Originally an independent company, Neutrogena was listed on the NASDAQ in 1973. In 1994, Johnson & Johnson acquired Neutrogena for $924 million, for $35.25 per share. Its product range includes sunscreen, hair care, and skincare products. Following the spin-off of Johnson & Johnson’s consumer business, Neutrogena is now managed by Kenvue. However, since these lawsuits occurred before the formation of Kenvue, Johnson & Johnson remains the defendant in these legal proceedings. These litigation cases have still exerted a certain influence on Neutrogena’s sales.
