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Organic sales rose 0.9 percent in the three months ended Sept. 29, the company said Thursday. Analysts projected growth of 1.7 percent, according to the average of estimates from Bloomberg.
The company said it expects organic sales growth toward the low end of its 2024 outlook of 2 percent to 4 percent, while maintaining its outlook for adjusted earnings per share of $1.10 to $1.20.
The results indicate slow progress in turning around Kenvue’s business under growing scrutiny from investors including Starboard Value.
The activist investor took a stake in the maker of Listerine recently, and is pushing for changes aimed at boosting the stock. Kenvue, whose brands also include Band-Aid, has struggled to turn around its skin health and beauty category and keep up with growing competition, and Starboard said Kenvue needs to do a better job in those categories to spur growth.
Neutrogena’s recovery in the US stalled last quarter amid a weak sun-care season and “decelerating skincare category dynamics,” CEO Thibaut Mongon said on a conference call. The company is working with more dermatologists who are popular on TikTok to help boost this segment, he said.
“Recovering market share losses needs more investment,” said Bloomberg Intelligence analyst Diana Gomes. Meanwhile, the company’s revised 2024 outlook “hurts confidence” in the company’s turnaround efforts, she said.
Kenvue is also facing pressure in China, where the company has said weak shopper sentiment has hurt its business. Procter & Gamble Co. has also faced sluggish sales in China, especially for its SK-II beauty brand. On the call, Mongon said the consumer in China remains “challenged.”
Volumes fell 1.6 percent in the quarter, more than analysts had projected.
Kenvue’s shares were flat in premarket trading. Through Wednesday’s close, Kenvue’s stock had gained 4.5 percent this year, while the S&P 500 Index rose 24 percent.
By Leslie Patton
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