Kenvue's stock slides 5.8% as J&J spinoff's revenue and guidance fall short of expectations

By Steve Gelsi and Ciara Linnane

Revenue was weighed down by weakness in U.S. skin and beauty and softness in China

Kenvue Inc.'s stock fell 5.8% at the closing bell on Thursday, after the consumer-health business spun out from Johnson & Johnson (JNJ) last year missed revenue estimates for the fourth quarter and offered soft guidance for 2024.

Skillman, N.J.-based Kenvue (KVUE) posted net income of $327 million, or 17 cents a share, for the quarter, down from $361 million, or 21 cents a share, in the year-ago quarter.

Adjusted per-share earnings came to 31 cents, ahead of the FactSet consensus of 28 cents.

Sales fell 2.7% to $3.67 billion, below the FactSet consensus of $3.78 billion.

Sales were buoyed by higher prices but volumes fell 8.2%. About 5% of that volume performance was due to the lapping of an early and strong start to the cold, cough and flu season in the prior year, 2022 product discontinuations and customer inventory reductions.

The 2023 cold and flu season had a far slower start, as the company reported in October.

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"The remaining approximately three points of volume performance are mainly due to softer than anticipated performance in the U.S. skin health and beauty business and continued softness in China," the company said in a statement.

Chief Executive Thibaut Mongon said the company will prioritize its U.S. skin-health and beauty business in 2024, and aim to reach more consumers and invest in its brands.

The company now expects 2024 sales to grow 1% to 3% with foreign exchange expected to shave about 1 percentage point off growth. The FactSet consensus implies revenue growth of 3%.

It expects adjusted EPS of $1.10 to $1.20, below the analyst estimate of $1.26 a share.

"While we are confident in our plans, our guidance prudently reflects the potential for a continued challenging macro-back drop and the possibility for unknowns in our seasonal businesses," Chief Financial Officer Paul Ruh said in a statement.

The stock has fallen 10.2% in the year to date, while the S&P 500 SPX has gained 4.8%.

-Steve Gelsi -Ciara Linnane

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02-08-24 1607ET

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