Kenvue disclosed its financial performance for the fiscal first quarter ending on March 31, 2024. Net sales for the quarter increased by 1.1% to $3.9 billion, building upon a 7.3% increase in the corresponding period of the previous year. Organic growth, which reached 1.9%, also built on the significant 11.2% organic growth from the prior year. This growth was mainly fueled by sustained consumer demand in Self Care and growth in Essential Health, particularly in Oral Care, although Skin Health and Beauty segments performed below expectations.
The increase in net sales and organic growth was primarily driven by strong momentum in Self Care and Essential Health. This included significant consumer demand in Self Care and growth in Essential Health, particularly in Oral Care. However, these gains were partly offset by underperformance in Skin Health and Beauty.
In the first quarter, Kenvue experienced a gross profit margin of 57.6%, up from 55.2% in the same period of the previous year. The adjusted gross profit margin was 60.2%, compared to 57.3% in the prior year period. This expansion of 240 basis points in gross profit margin and 290 basis points in adjusted gross profit margin was primarily due to value realization, ongoing efficiency improvements in the global supply chain, and a reduction in net input cost inflation.
However, the operating income margin for the first quarter stood at 14.1%, down from 16.6% in the prior year period. This decrease was mainly attributed to a $68 million impairment charge related to the company’s interim headquarters and expenses associated with restructuring and optimization initiatives.
Net sales and organic growth were influenced by a 5.0% increase in value realization, counterbalanced by a 3.1% decrease in volume. In the first quarter, diluted earnings per share stood at $0.15, while adjusted diluted earnings per share were $0.28.
Around two points of the volume decline were due to the anticipated completion of one-time retailer inventory re-builds in the first quarter of 2023 and the effects of retailer inventory reduction in the first quarter of 2024. The company anticipates this reduction in retailer inventory to persist through the second quarter of 2024.
“We entered 2024 with clear strategic priorities to reach more consumers, reinvent our ways of working to invest more behind our brands, and foster a culture that rewards performance and impact,” said Thibaut Mongon, Chief Executive Officer. “We began executing against these priorities during the quarter, enabling a solid start to the year and advancing Kenvue forward in our ambition to become the undisputed leader in consumer health.”
Self Care experienced organic growth of 4.2%, driven by a 5.6% increase in value realization, slightly offset by a 1.4% decline in volume. This growth was attributed to the company’s success in enhancing its presence and visibility in stores, engaging effectively with consumers and healthcare professionals, and introducing scientifically supported innovations.
The skin Health and Beauty segment experienced a decrease in organic growth of 4.5%, driven by a 2.4% increase in value realization, but offset by a 6.9% decline in volume. The underperformance in commercial U.S. in-store execution outweighed the segment’s strength outside the U.S., aligning with the company’s anticipated outcomes.
Essential Health recorded organic growth of 4.9%, driven by a 6.8% increase in value realization, slightly offset by a 1.9% decrease in volume. The segment’s success was primarily attributed to strong global growth in Oral Care, supported by ongoing endorsements from healthcare professionals and a focus on innovative products.
