Kenvue (KVUE) Q1 2025 earnings summary

Executive summary

• Entered 2025 with plans to accelerate profitable growth, leveraging leading consumer health brands and strong execution despite macroeconomic and seasonal headwinds.

• Q1 2025 net sales were $3.74B, down 3.9% year-over-year, with organic sales declining 1.2% due to volume and price pressures, especially in Skin Health and Beauty and Self Care outside the US.

• Net income rose 8.8% to $322M, driven by lower cost of sales, reduced SG&A, and absence of prior-year impairment charges.

• Completed exit of over 2,300 transition services and consolidated US office footprint, including new global HQ in Summit, NJ.

• Announced CFO transition: Amit Banati to succeed Paul Ruh, bringing 30 years of global CPG experience.

Financial highlights

• Q1 2025 net sales: $3.74B (down 3.9% year-over-year); organic sales down 1.2%.

• Adjusted gross margin: 60.0% (down 20 bps year-over-year); gross profit margin: 58.0% (up 40 bps).

• Adjusted operating margin: 19.8% (down 220 bps year-over-year); operating income margin: 14.9% (up 80 bps).

• Adjusted net income: $465M (down from $547M); net income: $322M (up from $296M); adjusted diluted EPS: $0.24 (down from $0.28); diluted EPS: $0.17 (up from $0.15).

• Free cash flow improved to $0.2B from $0.1B year-over-year; cash and equivalents: $1.1B; net debt: $7.7B.

Outlook and guidance

• FY 2025 net sales expected to grow 1%-3% year-over-year; organic sales growth 2%-4%.

• Adjusted operating margin expected to decline due to $150M tariff impact; adjusted diluted EPS expected to be flat to up 2% year-over-year, with FX headwinds.

• $350M in annualized cost savings anticipated by 2026 from restructuring and Vue Forward initiatives.

• Adjusted effective tax rate forecasted at 25.5%-27.5% for 2025.

• Company expects to continue quarterly dividends and maintain sufficient liquidity for obligations and growth investments.