Kenvue Reports Q3 Earnings Below Expectations

(Reuters) – Kenvue (NYSE:KVUE) reported third-quarter sales marginally below Wall Street estimates on Thursday, impacted by weakness in its skin health and beauty unit that includes Neutrogena and Aveeno, amid pressure from activist hedge fund Starboard Value.

The consumer products company has faced criticism from investors regarding lackluster growth in its skincare and beauty brands.

Following Starboard's acquisition of a substantial stake, the activist hedge fund indicated potential for revenue growth and improved margins for Kenvue's beauty brands.

Kenvue is focusing on boosting sales through increased marketing spend and enhancing the in-store presence of its skincare products, including brands like Clean & Clear. However, sales in this segment fell 4.2% to $1.07 billion in the third quarter ending Sept. 29.

Analysts had forecast segment sales of $1.10 billion for the quarter, according to data from LSEG.

Total revenue dropped slightly to $3.90 billion, below analysts' expectations of $3.93 billion.

Growth in its self-care and essential health units, which include OTC products like Benadryl, Band-Aid, and Listerine, helped offset some skincare weaknesses.

On an adjusted basis, the company reported a profit of 28 cents per share, compared to the analysts' estimate of 27 cents.

Kenvue anticipates annual net sales growth to be at the lower end of its 1% to 3% forecast.

The company confirmed its annual per-share profit forecast to be between $1.10 and $1.20, which aligns with analysts’ expectation of a profit of $1.14 per share.