Kenvue (KVUE) Q1 2026 earnings summary

Executive summary

• Net sales for the quarter ended March 29, 2026, were $3.91 billion, up 4.5% year-over-year, driven by favorable foreign currency, pricing actions, and organic sales growth, partially offset by lower volumes in certain categories.

• Net income rose 47.2% to $474 million, with diluted EPS of $0.25, compared to $0.17 in the prior year quarter; adjusted diluted EPS rose 33% to $0.32.

• Operating income increased 37.5% to $767 million, with operating income margin expanding to 19.6% (adjusted: 24.0%), reflecting improved gross margin and lower SG&A expenses.

• The company is undergoing a $250 million restructuring initiative in 2026 to optimize operations and drive efficiencies.

• A pending merger/acquisition with Kimberly-Clark is expected to close in the second half of 2026, with shareholders to receive cash and stock consideration.

Financial highlights

• Gross profit margin expanded to 58.9% from 58.0% year-over-year (adjusted: 60.8%), aided by supply chain optimization and pricing.

• SG&A expenses decreased by $84 million (5.5%), now 37.2% of net sales, due to restructuring savings and lower brand support costs.

• Interest expense, net, was $95 million, nearly flat year-over-year.

• Cash flow from operations increased to $489 million, up $61 million from the prior year; free cash flow increased to $0.4 billion from $0.2 billion.

• Total cash and cash equivalents stood at $1.1 billion; total debt at $8.7 billion as of March 29, 2026.

Outlook and guidance

• The 2026 restructuring is expected to yield $200 million in annualized pre-tax gross cost savings upon completion.

• Management expects continued variability in the macroeconomic environment due to geopolitical and trade uncertainties.

• The pending merger/acquisition with Kimberly-Clark is anticipated to close in the second half of 2026, subject to regulatory approvals.