Kenvue — Second Quarter 2026 Earnings Summary

Financial Performance

• Net sales increased 3.0% year-over-year to $3,955 million for the quarter, driven by 1.6% organic sales growth and a 1.4% foreign currency benefit.
• Organic sales growth was comprised of 0.9% favorable value realization and 0.7% volume growth.
• Diluted earnings per share (EPS) increased 9% to $0.24, compared to $0.22 in the prior year period.
• Adjusted diluted EPS increased 7% to $0.31, compared to $0.29 in the prior year period.
• Gross profit margin was 58.2%, down from 58.9% in the prior year period; adjusted gross profit margin was 60.2%, down from 60.9%.
• Operating income margin was 17.7%, down from 18.0% in the prior year period; adjusted operating income margin was 22.1%, down from 22.7%.
• Net income was $456 million for the quarter.
• Interest expense, net was $90 million, compared to $94 million in the prior year period.
• Effective tax rate was 23.7%, down from 28.6% in the prior year period; adjusted effective tax rate was 22.9%, down from 26.9%.
• For the six months ended June 28, 2026, net cash flows from operating activities were $1.2 billion, up from $1.0 billion.
• Free cash flow increased to $1.0 billion for the six-month period, up from $0.8 billion.
• Capital expenditures were $0.2 billion for the six-month period, down from $0.3 billion.
• Total debt was $8.5 billion as of June 28, 2026, and December 28, 2025.
• Total cash and cash equivalents were $1.1 billion as of June 28, 2026, and December 28, 2025.

Business Segments and Product Lines

• Self Care: Net sales increased 2.2% (organic +0.6%), driven by 1.2% value realization offset by 0.6% volume decline. Growth was driven by North America, EMEA, and Asia Pacific. Key drivers included strong eCommerce momentum, Zyrtec® gaining share, Pepcid® outperforming the market, and sequential improvement in Pain and Cough/Cold businesses. Tylenol® consumption trends improved sequentially with slight market share gains.
• Skin Health and Beauty: Net sales increased 5.1% (organic +3.7%), driven by 2.7% value realization and 1.0% volume growth. Growth occurred across all regions, led by Hair Care and Face Care. Innovations included OGX® Pro Growth + Peptide and Neutrogena® Ultra Sheer Sun. Neutrogena® improved household penetration for the third consecutive quarter.
• Essential Health: Net sales increased 2.3% (organic +1.1%), driven by 1.9% volume growth offset by 0.8% unfavorable value realization. Growth occurred in Asia Pacific, Latin America, and North America, fueled by Wound Care and Baby Care, which offset a decline in Oral Care. Key innovations included Band-Aid PRO HEAL® 5 Day Protect, Listerine® global restage, Listerine® On-The-Go sachets, and Stayfree® upgrades in India.
• FDA Approval: Received U.S. FDA approval for Tylenol® with Naproxen, the first OTC fixed-dose combination of acetaminophen and naproxen sodium, expected to be available at major U.S. retailers soon.

Other Key Points

• Pending Transaction: Kenvue is in a definitive merger agreement to be acquired by Kimberly-Clark in a cash and stock transaction. Shareholder approvals were obtained on January 29, 2026, and the Hart-Scott-Rodino waiting period expired on February 4, 2026. The transaction is expected to close in the fourth quarter of 2026, subject to foreign regulatory approvals and other closing conditions.
• No Guidance: The company will not provide forward-looking guidance due to the pending transaction with Kimberly-Clark.
• No Conference Call: Kenvue will not host a quarterly conference call due to the pending transaction.
• 2026 Restructuring Initiative: The Board approved an initiative expected to result in approximately $250 million in pre-tax restructuring expenses and other charges for fiscal year 2026.
• Restructuring Expenses: Restructuring expenses and operating model optimization initiatives totaled $69 million for the quarter and $147 million for the six months ended June 28, 2026.
• Pending Transaction Costs: Expenses related to the pending transaction with Kimberly-Clark totaled $16 million for the quarter and $32 million for the six months.
• Separation-Related Costs: Costs related to the establishment as a standalone public company, including legal entity name changes and IT costs, totaled $7 million for the quarter and $10 million for the six months.
• Geographic Performance: North America net sales were $1,905 million; EMEA were $956 million; Asia Pacific were $723 million; and Latin America were $371 million for the quarter.