Kenvue (KVUE) Q1 FY25 earnings call: guidance and Q&A

How have innovation plans evolved given the current environment and consumer pressures, especially regarding timing of launches and merchandising support?

Innovation plans are broadly unchanged, focusing on efficacy, trust, value, and convenience. Kenvue is tweaking plans to ensure the right price architecture (e.g., hitting psychological thresholds like $4.99, $9.99, $14.99) and channel presence, noting positive consumption impact from strategic price investments.

“We continue to believe that innovation and giving reasons for consumers to enter our categories that, remember, are all underdiagnosed, undertreated, underpenetrated is more important than ever.”

asked by Bonnie Herzog · answered by Thibaut Mongon

Can you frame expectations for Q2 organic growth and discuss the degree of confidence in the embedded improvement for the back half of the year?

Q2 organic growth will remain pressured by Asia destocking and U.S. price investments, with seasonal shifts (prolonged winter delaying allergy/sun) potentially shifting revenue. Confidence in H2 acceleration is high due to strong commercial plans, innovation, marketing ROI, and RGM benefits, assuming category demand remains within the anticipated 2-3% range.

“What gives us confidence that we will accelerate growth in the second half is the strength of our commercial plan. We have more innovation. We have -- we see that our investment in breakthrough marketing campaigns is paying back, consumers are responding.”

asked by Peter Grom · answered by Thibaut Mongon

How should investors think about the Skin Health and Beauty segment's consumption trends versus reported revenue, especially considering China's impact and U.S. campaigns?

While more work is needed, Kenvue is encouraged by positive consumption signs in Skin Health and Beauty, particularly in priority platforms (Neutrogena Face, Aveeno Body, OGX Hair) and increased Gen Z penetration. Consumption is outpacing organic sales growth in H1, as anticipated, and this trend is expected to continue.

“What we have said all along is that this year, consumption will come ahead of revenue, of organic sales growth. And that's what you see playing out in the first quarter with consumption growing -- outpacing organic sales growth.”

asked by Andrea Teixeira · answered by Thibaut Mongon

Are the price and trade investments in Skin Health and Beauty helping Kenvue catch up to competitors, and is the consumption uplift driven by new or returning customers?

Consumers are increasingly responding to investments, with positive signs like increased Gen Z household penetration for Neutrogena. The goal is to hit 'psychological thresholds' ($4.99, $9.99, $14.99) rather than being the cheapest, making products easier to shop and driving consumption.

“We see -- as I said, what we are particularly excited about is to see the increase in household penetration with Gen Z consumers, which is a demographic where we were lagging our competitors.”

asked by Keith Devas · answered by Thibaut Mongon

What is Kenvue's supply chain exposure to China shipments, and could this situation create opportunities if competitors face product shortages?

Kenvue's supply chain is 'in region for region,' with China representing only ~10% of annualized foreign sources. The company focuses on resiliency, dual sourcing, and agility to capitalize on market shifts. A resilient supply chain is valued by retail partners, and China tariffs represent about 2/3 of the total impact.

“As you know, China represents a relatively small part of our imports into the U.S. Our supply chain is structured to be in region for region. So we produce very close to where we sell.”

asked by Nik Modi · answered by Thibaut Mongon

What was the benefit from high U.S. cold/flu incidents in Self Care, including inventory replenishment, and can you break down the $150 million tariff impact?

U.S. distributors replenished inventory to appropriate levels in Q1 due to a strong cold/flu season. In Asia, destocking will continue into Q2 due to lower incidents. The $150M tariff impact is primarily from China (~2/3 of total, at 145% rate, 2/3 finished goods/1/3 raw materials), with Canada contributing less than 10% (mostly USMCA exempt). Pharma tariffs are not yet in effect.

“In Asia, we saw something different with a low level of incidents continuing in the first quarter. As a result of that, if you recall correctly, we were expecting retailers to deplete their inventory with the expected increased demand during the first quarter. That didn't happen to the level and to the extent we expected.”

asked by Filippo Falorni · answered by Thibaut Mongon

When will tariff impacts hit the P&L, when will mitigation efforts take hold, and can the impacts be fully offset by 2026?

Tariff impacts are reflected in current guidance, offsetting FX benefits. Mitigation actions (productivity, alternate sourcing, RGM, targeted pricing with retailers) are underway, with the goal to absorb as much as possible this year. Kenvue is working towards absorbing the impact in 2026, but the situation remains fluid.

“In terms of being able to absorb it in 2026, we're working towards it. We have many actions in place that includes productivity initiatives. We are looking for alternate sourcing and we're optimizing our supply chain.”

asked by Korinne Wolfmeyer · answered by Paul Ruh