Kenvue (KVUE) Q2 2026 earnings summary

Executive summary

• Net sales for the quarter ended June 28, 2026, increased 3.0% year-over-year to $4.0 billion, with organic sales up 1.6%, marking the third consecutive quarter of growth across all segments and regions.

• Net income rose 8.6% to $456 million, and diluted EPS was $0.24, up from $0.22 in the prior year quarter; adjusted diluted EPS rose 7% to $0.31.

• The company is undergoing a pending merger with Kimberly-Clark, expected to close in Q4 2026, with shareholders to receive a mix of stock and cash.

• Transformation and restructuring initiatives are underway, including a $250 million program to optimize operations and supply chain, targeting $200 million in annualized cost savings.

• Results met or exceeded internal plans, reflecting operational efficiencies and increased strategic investment.

Financial highlights

• Gross profit margin declined 70 bps to 58.2% due to input cost inflation, tariffs, and FX, partially offset by supply chain optimization; adjusted gross profit margin was 60.2%.

• Operating income for the quarter was $699 million, up 1.0% year-over-year; operating margin was 17.7%.

• Net cash from operating activities for the six months was $1.18 billion, up 12.2% year-over-year; free cash flow for the first half was $1.0 billion.

• Total debt as of June 28, 2026, was $8.5 billion; cash and equivalents were $1.1 billion.

• Quarterly dividend increased 1.2% to $0.21 per share, with $796 million paid in dividends in the first half.

Outlook and guidance

• The merger with Kimberly-Clark is expected to close in Q4 2026, subject to regulatory approvals.

• The 2026 restructuring is expected to deliver $200 million in annualized pre-tax cost savings.

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