Kenvue (KVUE) 7 Nov 242024 Q3 Earnings call transcript

Hello, and welcome to the Kenvue Third Quarter 2024 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Sophia Simon, Head of Investor Relations for Kenvue.

Good morning, everyone. I'm pleased to be joined today by Thibaut Mongon, Chief Executive Officer; and Paul Ruh, Chief Financial Officer.

and I'd statements remind our regarding, financial market started, call that operating get performance, forward-looking includes among opportunities we like you to today's and Before growth. other things, beliefs, results These statements and subject to and are differ various to could or that about uncertainties changes to future materially. are and expectations risks, difficult represent events assumptions cause current our predict our actual

our this website refer regarding our to uncertainties, our call these posted related materials information the on For with please to and filings SEC. risks earnings and

During or information. measures. in These this information financial to as non-GAAP financial non-GAAP with is call, non-GAAP we or not conjunction will that, also superior those are be most for directly over GAAP. the pass for the our comparable directly intended this on GAAP reconciliation directly to financial The and non-GAAP of and financial most GAAP GAAP page website, presented measures mostly measures the reference should certain comparable in not items be Kenvue's of financial isolation substitute U.S. Thibaut. this found presented considered release presentation accordance those U.S. our a Those substitutes morning's in presentation in With be IR as measures available U.S. GAAP to with financial and viewed financial of to a U.S. information measures can call www.investor.cenview.com. U.S. press comparable I'll the

everyone, you, Thank joining us for today.

Investor of and sector, are as brings both Relations team. XX in he's Many and you She of to Kenvue in over equity product First, now Relations. pleased consumer research Sophia experience know of welcome our part we Head and I'd Investor the of the like years Sophia. expertise

working trusted and to addressing, our investment our organization, of In new the playbook rapidly of to professionals are actively generated our and and value. year-over-year we create are softer portfolio iconic brands, of brands funded through that presence ways our adjusted of to our our and diluted and top on delivered strengthen Throughout line we and share full growth last our in consumers Leveraging care we more in earnings we fulfill amplify health top fundamentally our long-term organic are of the K delivered prominence activating in store, innovation strong our third commitments unleash productivity we entire another impactful efficiencies, per and a way. Despite X.X%, shareholder year. directly X.X% transforming the quarter potential more reach of quarter, and $X.XX.

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year last to and analytics For powered XX% consumer engagement, prominence direct more marketing, care in-store XXXX, social AI. increasing invest on an and on by did with we advertising, through we approximately track focus are health media than professional engagement

efficiency are we're and more, only improving marketing but also spend. Not investing the of we effectiveness our

agency of relevant costs. our For market while new content factory, ecosystem drive August will each our global creation in the example, to content announced production leverage we we in the reducing

delivered business. adjusted margin marketing these and of funding expansion another year. QX, versus last XXX in gross strong are quarter efficiencies we productivity of In driving We basis by investments our points

in to non-marketing-related a organization, decline our are starting see as we addition, In transform expenses. we operating rapidly also

now on to agreements track exited remain fully by X/X exit and these TSAs have nearly mid-XXXX. We our of

to find independent operate to continue teams our company. TSAs, cost-effective these ways unwind as simpler an more we As better, and

our are to optimize as we the our to $XXX We annual Vue by our modernize through in million organization. XXXX continue Forward initiative on and also systems track deliver savings

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convenience we the consumers that control own and performance of Around of looking their and taking at our looking quarter. Now highlights to are see prioritize key this continue the for health value. world,

year growth. our continued quarter, where line fever, X.X% saw allergy low Care, Self X.X% grew market. Care expectations Self outperformed of quarter segment, lapped we organic once with sales in again volumes ago strong largest third in incidence the In and In of a the comparison by we a pediatric our as impacted

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are with spend Hurts this easy-to-swallow with advertising We are our campaign. and expanding of our innovation increased retailers amplifying the impactful recently an rapidly Tylenol and Greatness key launched distribution approach across omnichannel

Tylenol consumers energetics a result, adult the in is easy-to-swallow the #X bringing As internal across to the innovation and new U.S. already is performing brand.

gain continues our Self as to well. Care Outside U.S., the share portfolio

first marketed mid-teens to growth we drove win as Nicorette Nicorette. both nicotine cessation. with only aid For vaping to and example, a the smoking Quickmist replacement continue U.K., and we in In therapy

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well, in all of the volume all with to a broad-based for second X.X% growth row. growth delivered top growth year, of perform and quarter across Essential We organic Health last third driving the regions. continued on categories in quarter X.X%

Here our to priorities as well, we are growth. sustained advancing drive

Listerine for another quarter with in example, high growth Oral For strong single-digit was globally. Care, this

partners, growth with prominence our in-store top especially We the impactful of by enhancing with in and driving Listerine Clinical displays, like latest this innovations are U.S. expanding our retail our distribution Solutions

and media with the to social of relevant more spend consumer In engaging increasing addition, superiority highlights creators we a on partnering are Similarly, that LISTERINE Bound content we media our U.S., [indiscernible]. innovation in reaching our digital consumers, positive Aid impact in of our the mid-single-digit working latest of of see we new behind the ways success with drove where way. growth the generate

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Beauty, to for and declined was playbook dynamics. is decelerating Health category Skin recovery Skin and season pace this of the the delivering by In we Care want our the and X.X% U.S., organic results quarter a sun the see, yet sales hindered segment year-over-year. muted In not

consumer the many know, backdrop, China, In as remains challenging. you of

strengthen segment. addressing a skincare with team key headwinds best in the by sustain and short While world-class term, performance X and higher we industry, building pace improve by in these our is enablers at partnering underlying are moving expertise this to to also the leaders

with a Beauty as accelerating week, of Health successfully Head leader This for in building brands, is with seasoned Kenvue Skin Beauty. strong deep new win Europe. and how welcomed to a Andrew track leading Health our Skin Andrew turnaround North growth accomplished record to a and and global understanding we America and Steimle and in of

dermatologist, creating TikTok. lags are Banusali, educator world's dermatologists X social also Dr. week, most a million the leaders Last announced collaboration on influential of XX Skin key followers the between followed Dr. over partnerships with We and powerful recognizable and most a social highly in Care. skincare with breakthrough and renowned over million innovator; media worldwide we channels across XXX Neutrogena Shah,

are of the is create to for segment direction X expanding future. our and innovation brand dermatologist more multiyear the accelerating come authentic this engagement. objective communication partnership foundational The in steps to the in the and strengthen right engaging with while more and These

the growth the in realization and new our deliver double growth demonstrating expansion. solid growing power launches, distribution by value Sales and was and segment. continued driven balanced activation third digits Europe performance to plans during volume between brand of quarter, playbook this product strong

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we the sequential overall U.S., improvement the that expecting, for we volume year-over-year. not segment with the declining revenue were see did In

are by in thus However, of areas far. the recovery we prioritized sequential that encouraged signs we have early

about see for the for basis we points example, while progress sequentially in planograms which platforms, XX% channels. effort For XX sales In still behind concerted of brand Faith and the year-over-year, our starting strengthening Neutrogena, the performance brick-and-mortar U.S. put in largest care Sun, account gained in quarter. have we in-store through new place of share initial were And are since X face to the midway in track put phase, NEUTROGENA down

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Bank, and we Neutrogena. while to generate and point for improvement innovations, further we Neutrogena retailers, our distribution, is Collagen evidence new at skin for some early of starting Share shelving this broad our improvement, Acne from We others ultra navigation with see see now are year making improved are benefiting for gentle Patch resets sensitive complete progress. our that cleanses. this opportunities distribution distribution latest as playbook and in increased Kenvue results at In for

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pivot as investments TikTok platforms reaching are consumers to with such we continued and Instagram. increased our social Importantly, marketing more and

example, first with campaign supporting video to activation has through Z views generated For This bank an are Gen consumers XXX [indiscernible]. innovation we million social celebrity more impactful our collagen than targeting date.

our is across starting our are shoots green on we prioritized and and have But thus actions to the that balance diligently teams skin this both work working momentum sequential and Neutrogena our the be in clear, of share of building pockets in amplifying far. business. business me let These health progress nitrogen these same the are beauty drive still gains

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that you a organization you see told At in a consumer division I a global Kenvue of of would the independent beginning we pure-play as action an being health. from new transform the year, in leader large to

on line. in Our seeing its we our well way, of the the transformation and yet P&L, part are seeing started not improvements but already in impact we full is top

within XXXX of softer end enabling year. we health on our per the for combination rate brand us tracking both of fueling future the are beginning half care the in and low you still in growth year we with adjusted savings the the year self same for the health deliver which, due ahead pace the in growth, while at our the and with skin in outlook At recovery initiatives, both towards cost in range share of of to investment beauty and Our are diluted category acceleration earnings the dynamics beauty. back is skin an programs our shared time, and to productivity

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Thank you, good morning, everyone. Thibaut, and

X.X%, X.X% a by Overall driven quarter the growth was realization growth Value incremental organic year. year-over-year, segments all X.X% volume from in contribution Health carryover organic for declined quarter third this growth and Skin in benefits value with and Care Health value across by and realization contributed and Essential Beauty. realization row. actions Self second taken driven volumes balanced Our to

in expect with closer we our to both growth bigger look continued strength particular we Self-care our was expectations expect continue and as our Taking year-over-year, play we to X.X% allergy. a and across in role While a growth, growth with in the algorithm gains price line drove volumes to organic forward. segments. at mix share segment will contribute going pain

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For quarter, during X.X% year-over-year coming quarter. the volume the grew consecutive at in third second

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Moving gross on margins. to adjusted

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efficiency quarters. and the we you on We're discipline, adjusted margins productivity improved benefits margin a operational gross see of can fact, last gross the fostering and have culture year-over-year In in this our focused year. laser adjusted X during

in Our that quarter the provide expectations ahead typical driving second margin the with in relentless of and through lower increasingly are is directionally in the aligned the extracting leveraging automation real-time helping optimize teams third progression procurement our management. gross was level efficiencies that adjusted and half All savings, slightly logistics of digital process the year. analytics, XX.X% but sequential demand upgrades in,

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the often with that have parent teams company successfully a exited TSAs hundreds Our former disruptions of without operational accompany separations.

approximately to exited exit of have pace and mid-XXXX. we by on our today, of TSAs As all XX% are

our Forward The initiative on is plan Vue tracking efficiencies. to

reduce Forward and and Vue eliminate more Our equips us effectively to redundancies, systems our to competitively areas and ultimately operate more such strengthen consumer we to in forecasting. automation decision-making drive capabilities of new and insights as hierarchy layers faster as implement

this investments. and view the range We our activation the XXXX, run to continue to expect brand rate our trend approximately is year thus XX% given we chain Closing be believe expect out adjusted interest of XX% interest the P&L. in quarter the factors which million. operating to in current year-to-date benefits our and Net was from for forward margin and million, increase for efficiencies $XX in expense supply expense $XXX the the our quarterly

the effective increase third tax rate income planned, costs. XX.X%, to shift taxes, in in higher adjusted was jurisdictional due a For bit an than mix a primarily and of nondeductible quarter

to XX%. for be earnings full adjusted year And $X.XX. XX.X% the of net $XXX range income As expect the our adjusted per such, adjusted to and tax million in we share was rate now were diluted finally, quarter

our summarize the year XXXX. to for full Now expectations

recovery skin the the low Care end category with softer the to the shared Health Beauty. beginning in X% growth in you pace Skin beauty and range X% from of of expect due of heard organic half we the and and of fat to dynamics you second towards both Self year in As Thibaut, the year the we and in

relates far. it have incidents flu, at seen given late towards this point, start the tracking so we As coal to of of to season we're a levels the and

a and within full stronger in And growth fueling the see per we range the the gains for diluted We planned productivity top investment are year. confirming and year. headwind assuming $X.XX for will for brand us a in as about to than our earnings EPS adjusted adjusted future impact softer share, to line, acceleration deliver foreign $X.XX for outlook are of we exchange be of the X% of efficiencies allowing offsetting a

skin our We the in up free increase of of new parts and important plan signs to health segment organization exit in All showing fast-moving leaner, this stabilization benefiting year this with and Care profound more powered Health by as well with agile Health brands. investment beauty business. resources segments, of more a and to transformation opportunities our Essential as playbook from and the

This value will time. creation our are way questions. makes over you. take on Thank And confident us your to that we we drive that, with strong

of question from first Goldman Our Herzog Sachs. Instructions] the [Operator with Bonnie comes line

I although does guidance, on growth sales guess your I question in QX. lower. still a decent had a step-up imply updated is now It organic

was more hoping the little drivers on color of this. a I for So

seen guess you of ultimately, I cycle. QX. in consumer the your macro little trying October I context more global understand thinking and and visibility improve a the in the maybe shipments of U.S. more have I'm bit light of you purchasing a that instance, And For have guess, in normalized versus cost flu to pressures. about I'm

you for your Thank question guidance. our about updated

whole a We guidance that start the provided number a seeing the in category, China. the in your consumer so Skin deceleration flu From that a is scenarios. we revenue far. with of the have category pediatric slower of are seeing point we are to beginning to we of point different remember, category fever helping organic externally. late the QX, the growth the from factors about about And an Health and you and start far, so the are to not cost as the cold talked So of view call question that contemplated we seeing at season. year allergies view, The industry in remains seen several

certainly Having prepared health said that's skin and we heard not helping. in you in beauty, my internally to have remarks. especially do So that, and things as

Regarding QX, to be we continue X quarter expect and to the for to QX reasons growth that. strongest year our

seeing see playbook impact examples new in X And of action. is you many heard remarks. in we the of that prepared start first we CV our the that The cumulative

in elements destocking comparisons the the year, Two is easier second rationalization we quarter. year negatively fourth we that repeating and reason are last impacted year. The not this had year-over-year having are the portfolio QX last that

year. So this these for are us tailwinds

Two other of elements we that situation negatively with also slow fact base level the of no in this incidents China, low the comparable year, that in impacted both QX we part see terms now the year but are seeing flu season where last far years the season. to and start so are of comp the benefits a

quarter fourth how what that's terms on see growth. the the give So and do want you our EPS? Paul, guides in we of to thinking color revenue some

completely you, at through forward deliver, continue continue it and ability the maintaining by line our $XXX and activate top for with that And step Thank year. in well. both despite to brands and And going we're them efficiencies this are line. program productivity the being middle this million been the top is view to guidance despite on is range that our with forward we gross is delivering the will and to EPS, towards that and $XXX investments to agree have ongoing backdrop, to as that, in levels, realize confident to the we're expect our we also realized fueled improvements Thibaut. doing on deliver we the very million you I our of full margin

of next Anna Bank question America. of comes line from Lizzul with Our the

little China And if would trends a how could sounds Health. It sort just you first most wondering new what role? was [indiscernible]. And the can Andrew you was bit much I like for frame recent say was in sequentially. for is this for maybe of this if provide incrementally of also, a the weaker you drag Skin initiative

clarify. So if wondering was I you could

Yes, Anna.

of environment is slow the and So the sun the year. had helping Health season. certainly on in Beauty, We external not back Skin a half

skin You a heard not year. expect business Sun it an as And in us quarter, contribute which started QX. is continue category seeing softness continued to point, into from care as did much the in earlier we And we normal that, see Care, way, by we the would a third Asia. something in your in important we to U.S., to everybody, the deceleration throughout expect the for growth

slowing clearly are combined us elements X the down. So

to at sure focused in-store it's are playbook, continuing Now scale we things drive and with also distribution, across marketing internally, campaigns to conversion. consistently that prominence, And what playbook better the portfolio, that's on. the our need we there precision executing the are really And our right? making our applying know teams secure more stronger strengthening do

And differently playbook. of so implementing half year what the doing in top on back are of this the we

First and strengthening we foremost, are the team.

capabilities. new bringing talent, skills are We and

You remember of for R&D we also submit skills to build with that center headquarter. beauty marketing, It's skin in new may our capabilities opportunity with with new are year new and an our moving skin -- health. operations co-located, and New health to teams a excellence us next Jersey to

this week us to Andrew welcoming addition latest And team. is the this

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focused that's So we are what on.

America about our Andrew, Europe, and recently. who us new question North for joined leader Your

in We it Andrew to in mass Skin are what deep health our track Andrew He beauty market understanding in and record the brands, U.S. expertise takes internal Health decades brings team and around win businesses, the [indiscernible] skin agendas. transformation has skills a have turning deep to a of capabilities. and in X experience happy growing of and the augment joined moving and strong

the and see Skin and leader green with team Beauty with everybody amplify balance momentum business. across build our Growth Jan, our for will together Chief and So Officer, our North Health Andrew, whole we America of shoots the the Neutrogena Charmaine, the and

on let anti-Japanese the QX, we where DCL. question, is your year was DCL, which last China. of me last On in And was it sentiment beginning answer in experienced the

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question line with Teixeira the Our from Andrea JPMorgan. next comes of

in little I are skin year health green more and that will put beauty. you're the of going out But to if Andrew you the together. more announced been initiatives thinking put of the for what a will you was and backdrop about while improvement all on you have an hoping the bit how and now, shoots a to a together a elaborate you you translate the seeing see innovation investments of Understandably, putting there. into that it thinking as increased that can how digital you have and that in is you beginning amplify much accelerated putting be deceleration A&P

commentary, you getting a us you TSAs for anything be expecting prepared given expanded in give timing the the is So on can remarks to terms the materialize. TMA Paul, out. and bit And when this of the on getting we should

savings should and where we're so wondering thinking from the should Just that if with seeing be can us update far you evolve here? how we margins

Good right. morning, Andrea. All

hand so me question to over then I and start And Paul. the with let will

So investment. about how of going question impact the we're them your to first and shoots, our the green amplify

back, we step operate. a the year, you So way transforming if take we profoundly are this

very already same are after playbook, with well Care. new areas. in Beauty, and our but focus playbook in you responding the see biggest we we and face to what in-store we our segments gains do we our on health are volume applying started care plan. in And across and it's confident we And new portfolio. take decided are Neutrogena, We going X Health. green pleased have seeing it's with Skin of this investment. playbook that of changing our and execution. essential strong start us to to the -- Health are self It's share prioritizing And growth row playbook starts our quarters to so we we how that And also Essential the if are where are are the discipline ways that recovery far, our working a we in Self and And implementing is shoots. working, increasing that the sun makes that's are In we

by you a ago terms recommendation strengthening where are give I'll dermatologists, our and to examples we invested a strong So in presence And now with with see dermatologists. years of back care. were couple we face response we X in we of

So encouraging. that's really

In terms approximately mid-August, the of in-store we #X place, going of Neutrogena by see we were way, position lot area it's that new And in the put execution, focused halfway that it's And in a in we were energy. see where back planogram to the to continuing have the good since planograms an through quarter, so see September. U.S. October. face in

being back position in channels. we brick-and-mortar So now Neutrogena to have X weeks of track face #X us behind

of to direct the marketing a from consumer thing marketing Same effect encouraging. our and campaigns. very that's So

also and our clearly to a a consumers, younger us is Our for with in us. having working pivot partnership much a celebrities Gen-Z more in media, effective way audience social is with area focus connect which

Bank. XXX same We relaunch campaign on The You collagen is happening X.X OGX. our Neutrogena date think, thing talking heard about to views Demi billion I had, with on with me OGX Lovado. million views

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early As days, but us I said, an this in that's do more. encouragement to and direction for continue

precision this. the focusing sure the limited faith exactly care TSA are to do some, of they our across what but on a team are to want not a are what Andrew and with you even that that's on. in one Neutrogena second exits? And shoots, more at skin making amplify portfolio these big team team rest we So the green occupied and scale. Paul, is larger take executed part will the How play as well.

not operational so Of let feel very any track. encountered on back. Andre, disruption. exiting course. step I TSAs, we're that pleased have TSAs, we them on me

with So our remember And team, we exit That's Q program. doing allow thank manner. Forward the excellence. have TSA not will that necessarily for why to exits optimized you, an us in

next why but tracking we it benefits. realize going forward We an to optimized are announced That's it's quarter. time TSAs exit. limitation, few and view the exit year, But our have We well. given program, have we're we a not necessarily to last

some We realize program. started the forward have that view to benefits of of

track as of $XXX effectiveness, what million it's manner, about agile to savings deliver not more we'll savings, the specifically we are on on We impact. new full working in a well have finding leaner, the ways And taken. be by efficiency XXXX, actions only and seeing

already continue We org the largely the the the as progress of actions and actions of year throughout balance to have And well. actions, have a as taken lot functional XXXX into procurement we we taken well. will But as some of well.

Your also impact to the margins. question around is

We the starting continue of be we marketing to XXXX benefits fuel investments to of well. some of impact And see to towards full as will expect the that Forward. for particularly Vue incremental more are both, see

So as and terms our we our to where to on get deliver brands. expansion want a course, that from investing invest well. in And continue allow and the perspective of we algorithm fuel not from we exits there competitive Road margin to us be are of TSA behind will gross

the into we we the year So progress see throughout continue things, next that's year how as good and will well. far, and so balance of

line the from comes of with UBS. question next Peter Our Grom

XQ kind this recovery a on-algorithm to thinking your X some growth I'd where I skin be 'XX growth as in I that and you weaker health and year Health persist algorithm. know you're long-term on year? the guidance going we'll And I guess in of and the would headwinds next slower about the few kind be a get you Skin put totally as impact would probably trends prolonged you're beauty. one-offs in understand just curious Thibaut, reasons the weaker really return key line organic to kind months. So weaker these you persisting mentioned in the cycling maybe year, out to curious But some look of look category more into of forward stand growth? in to based just But the with ability U.S. growth Beauty today, anticipate next for potential how things is here, and of for of I we recovery to guess category

Paul. is This

allow for the not in can our that transformation. talk you XXXX. XXXX of going to you The from will to our very grow I will transformation that's a and question. algorithm, not than and this and our pace continue future. than growth we've Income at has levels pleased the tell transformation We're this will year. grow yet. faster I the look We're year we accelerate We're year been at into faster far, will the part business. line with made top XXXX and us to of invest sales, conversation about we that in our profound also progress competitive forward thank But are continue to a doing So so today.

continue acceleration top perspective, will to As is cash we algorithm so All sales. of to drive attractive line returns. that a And our I part will that of part in course, our mentioned, with of shareholder dividends. cash return from that shareholders, is

seasonal scenarios. businesses, the of In in terms categories, a seeing case categories. variety self We trend we're of of care, a performance particularly more normalization. in contemplated Specifically, monitoring towards we are of

will to assess as what on from to that to it's we how there, a become we that some will algorithm. that do and going We little top means think bit certainly we're considering And And we new deliver XXXX the of be of in terms a in factors believe has about normalization, will of that, our work. but we'll XXXX We beyond on base. things -- continue assess continue will XXXX.

the Our Filippo of comes Falorni question next from line Citi. with

levels. retailer question a on to ask I wanted inventory

have Some particularly inventory skin about the the care talked in peers ordering of your cautious patterns with category. being more retailers

you impact QX and then seeing given wondering So business, the should closures of drug for importance are for about specifically customers the your we was from And how for QX? your you and the think are any that into any the expectations saw store key channel from in channel, QX? what impact I if some recent impact potential

levels the take are world, So level. on low side. the in on believe let inventory I the me first inventory If one U.S., around look the we

given And seen Post, are certainly We in self-care happening chains the -- incidents. we in in that continue we post-pandemic the in to of categories happens. some ordering a general, not the you that If not the are post-COVID in stable. in that around across either to destocking see low QX QX. continue given channel. low in the remember, we the we In did season would would that and in inventory third cautious first of in where world, more expect patterns have levels we to -- in see we see would quarter, had QX -- happen supply channels some we until clearly half level continue world

up order we to retailers of and are see season. they live up And far, so the peak don't the ahead have that so have see until from And not of so you of you you need. they wait seen pick seen demand in direction they to heard And had we moving far. a for what we in going the I, weather as certainly of Northeast, stocking who those incidents good levels Paul

inventory net-net, healthy Kenvue at with would levels the exit So expect around of us I to XXXX world.

been the Your believe in overall There and It's the not in outside channel has has U.S. yet. the worldwide. the decline recent indicated well that the us future off footprint of consolidation In is Drug channel announcement traffic pharmacy doing U.S., a specific track regarding pandemic on I for U.S. highs. drug the very question strong channels coming the happened it's

make work we right closely their so And we customers with offer our to very the to sure assortment that shoppers.

other time our impact a when retail will on continue see partners move stores. plans. this the the with store closes, closely is very distributed with we into consolidation in short-term store their work present you so Every to And as inventory they

short-term are discretionary store see it and does you looking but said sell product not impact over and a need, you do Ken closes, products normalize. clear And any at for so may large, you when very We view. By we a a time, for reason.

cannot they need. we another if our see so products the usually in consumers get going find store X trust and store, to brand And to you

comes Deutsche the Our Bank. line with of Powers Steve from next question

of comments and talking I which link was shoots, health business, you 'XX is helpful. on initial back it down in about about were to to talked what great. your working playbook the Paul, that beauty. with wanted skin to is signs and In the green sort respect Thibaut of drill

other the market the hand, backdrop is On choppy.

a You're in of health for and sort in the like, guess, arrived, beauty. just of real still real example. earlier Andrew of sort skin full innings, turnaround I

you the business, So is business of the I mentality guess, to actually just ambition as or still the that grow that when that I'm 'XX? not not objective you that think grow we're -- stabilizing in business XX hearing next I'm business sure ambition if if in of stabilize -- next is taking sort sure goal the year? just year-over-year? I the commentary, all and into to the and to merely Or the 'XX like year is ready just feel one if between what parse different you're realistic of I'm I'm attempting context about the

Steve, Yes, question. very good

very be me Let clear.

what in are We we I point, segment to XXXX. what To think do on improvement happens we see to overall. Asia. we see an expect and From the today, to need to can on the focused returning consumer count in growth sentiment don't that your in category

this the in a deceleration execution in and working are EMEA. How us, we innovation, for category seen better It's better U.S. well. countering fuel playbook, seeing it's very campaigns. our fueling in do really the we XXXX, better with So we've growth expansion of the about

the gave So far. shoots green thus green we have that's of in shoots of that's early our plan parts in the portfolio for XXXX. prioritized you examples I

to add in-store capabilities. need continue precision conversion next we of the sure new that more to segment marketing making with drives points scale, content at the strengthen to in planograms distribution our the flip in year, expand meantime, as skills, back continuing prominence, Now half across and secure the stronger of talent

we what that's going forward. are So

of Devas Jefferies. question with line next the from comes Our Keith

I back I a but times, with that, wanted on it been proceeding guess, I a investment guess, softness double to, of your unique has a there's sounds category like mentioned theme you're just couple yet plans.

category for heavy in And if where that is time might and/or to investment the I'm a interested if and reinvest sounds the guess in trends expectations be well. your change guys thinking line return, a year changes so how how on 'XX think your it as the 'XX you will like it about persist, I on

category the of guess, of them I about some pressures. of light of you with might or still or, how in trends macro or the kind the rebound so in the growth reinvestments altering occur think a And of reinvigoration recovery a context

Thank the you question, Keith. for

getting brands in been forward. view We're and a a and our We investing also to that. program. productivity of in our our have our and margins both X-year done ability is are confident not gross the to our invest from in continue in to source competitive at funds we terms forward efficiencies of year profit, successful levels. gross Remember, out

fuel do believe the continue have So that building we the we for growth. to funds right blocks to

will And up, penetration, on particularly not investment, performance return course, onetime need proper category and we Of very along. a the that return, in step to continued the in But approach not gain right the which drive continue investment. we're monitoring all This sure our And get done to a well. in algorithm based to also the only investment thoughtful, we our beauty always manner, the own on make and is brands and -- but continued will is as have and our as thoughtful to what something in performance a brands. investments mean care the that is for calls and self reach we health where skin our continue social we well. in get health I

board, thoughtful the So drive have continue across the investment. the fuel and to we'll approach, continue to invest we to

with of comes Modi Markets. RBC next from Capital the question Our Nik line

allocating that amount kind and your kind products portfolio care money In sure what opportunity make you're kind right within SKUs. maybe family? about use And focusing demand an of I streamline simplify of is was the right NEUTROGENA hero the the view, right curious transferable SKUs Thibaut, brand to on the the you of to would be how complexity. of skin and think the to there

team The job of Yes, Nick, very the the does good good a for brand. portfolio question. biggest parts each prioritizing

brand. for on example, in XX% are for U.S. I So Sun currently and this our of told the revenue focused they phase in you approximately Neutrogena,

need It's sure to push making getting by part we we start this about platforms. that the right. So

Hydro example, mega is X of So our Boost, for platforms.

helps lot our about organization the see will will navigation that unifying for area you easier pleased in to at blocks, to we shop navigate job in see easy and the what of a and I'm a shoppers with making by in in of we stores. brick-and-mortar they as a with here, to partners consumers that retail it's So is and synergies you that It's products. making a fall, also make sure need stronger number this we also And range are initiatives get certainly And promoting shopability for doing brand, brands XXXX. the better shelving in right consumers that the this brand product progress of pick easier store.

Our Korinne comes with next Piper Sandler. the of Wolfmeyer from line question

takes the I'd are quarter. touch did there. on et cognizant costs, includes of input or we some inflation, and this think even tailwinds of headwinds bit as stronger. the some in cost even cetera. bit It about we QX transportation like around then to What the be of especially a margin through should And little you that XXXX. gross and come talk And the a puts little can maybe

the Thank you question, Korinne. for

winding are start recently component supply gross commodities, seen. benefits brands. increased on pricing dedicated are for And confidence When fuel are expand of the are of it a building gross labor less tailwinds margins team offset block value very will pleased realization of The going performance be for making gross that to a have efficiencies with it improve inflation get but have big are our margin. in is to and the Manufacturing and very probably to The some trends margins. our commodity the we be helping continuing are sure sources chain growth always that the we comes forward. will We the down. going we commodity But a lever, the logistics to to

it's gross are our we and the the to we or plant progress typically for mentioned is not investment maintaining QX point, full outlook. year to our remarks, So the throughout period, it outside of Margin dynamics I my lowest should of remember build we highest these our expectations. maintenance, as balance given seasonality perspective so We year. how in continuing is all are the I are are margins. a all our I that in that from prepared linear, be our XX% we mentioned. elements within said this that's where -- the not margin but at year, we close gross progression

that forward, on XX these targeted term. long-term I do a about gross more that the of As the XX going sustainable think in basis. are believe we basis long going I improvements are be goals points margin closer expansion in to about, to to talked which range the

to will pleased be the a continue It strength of performance. with So ours.

We and our growth. will for it building have the the blocks be fuel

last Our question from will come the of with HSBC. line Jeremy Fialko

from just a me. couple of So things

But transitory talked guess, and the of Sumare line. top more I on first season. little of them for of me relatively is all sound a why, in guess reasons these the terms lot cold kind phase guess thing the bit cautious you've of I of So flu I a about

the this just to U.S. kind underlying So a wanted rather in I of of And you to these any factors. then thing a pickup second to some of on consumer the slightly seen in there sort promotion? than or accumulation the of unfavorable phasing where an some which extent just areas focused of linked particularly softening kind discounting are the draw might out that have price is, the is

These we levels have know if moving direction. is consumer fever, yet year levels your the it's the geographies across geographies, or terms allergy, environment long incidents across same with a the don't me of Okay, like sun you in low seems to in in would low of pretty not, Jeremy, but across the at new and these I about had flu of it's When all is U.S. first of unusual all incidents let say levels incidents normal such it all external pediatric we've look question the categories. start

the and said looking agile what it and see be that, loved prioritize for the and meet to that and health make label. attention. different in consumers, but state which -- where need consumer, continues you you are Having compromise reflect needs we they on and of of ones, you private their the consumer, the a are we terms to where don't don't see consumer to can of that. present we the are points of with value, terms channels very convenience in lot consumer all their are different of a sure price In they focus the doesn't down trade to that's they the our so we that cater with of health

me heard reports that. give You frequent on

of OTC a even is see down label, label quarter worldwide penetrated the didn't significant we going highest see -- we again, this which in penetration in private category, the change quarter, This private again. largest penetration category, U.S.

a see increase From a the out point So intensity health nothing But view, categories. We we in see slight the our look would we say categories segment. in promotional we health single-digit self-care of increase intensity low for don't in that's what any the self when see the of U.S., in skin broadly at consumer. and I in care ordinary. essential and specifically, promotional

is that something And with, new in normal. would the more say, I line

morning. your us report questions. our our for on this you That performance. thank everyone, So Thank joining QX for all you, concludes

great back of in investment wish will tell, working, of the Kenvue of new continues a EPS rest efficiencies our the Kenvue that, transformation softer be progress half in on day. year. can new you all productivity, that you within deliver in ways As to terms a despite to of with allow in strong outlook our us playbook the revenue and With we a continued

participation. today's day. does This We you. Thank conclude wonderful a Have teleconference. your appreciate

disconnect may lines this at your You time.