01—Abstract
Summary
Summary of the 10-Q filed August 7, 2025. Cited figures are marked; the original filing is the authoritative source.
Kenvue Inc. reported net sales of $3.84 billiona for the fiscal three months ended June 29, 2025, down $161 million, or 4.0%, from $4.00 billion a year earlier.
Organic sales declined 4.2%, driven by volume decreases of 3.3% and unfavorable value realization of 0.9%. Operating income rose to $692 millionb from $154 million, but the prior-year period included a $510 million impairment charge, so the comparison is distorted. Net income was $420 million, or $0.22 per diluted share, versus $58 million, or $0.03, a year earlier.
For the six months, net sales were $7.58 billionc, down 4.0%, and net income was $742 million, or $0.39 per diluted share. Cash flow from operations for the six months was $1.05 billion, up from $727 million, mainly due to working capital timing. Cash and cash equivalents were $1.07 billion at June 29, 2025, flat versus year-end 2024.
The company paid $785 milliond in dividends and $127 million to repurchase treasury stock, and issued $750 million of 4.85% Senior Notes due 2032 while repaying $750 million of 5.50% Senior Notes due 2025. Total debt was $8.61 billion. Restructuring expenses under the 2024 Multi-Year Restructuring Initiative were $120 million for the six months, and the company expects annualized gross cost savings of approximately $350 million beginning in fiscal 2026.
The filing also discloses that Kenvue's Board has initiated a comprehensive strategic alternatives review under a Strategic Review Committee, which could include optimizing the brand portfolio. The company estimates incremental gross tariff exposure of approximately $150 million annualized. Talc-related liabilities in the United States and Canada remain indemnified by J&J, while the company retains talc liabilities for sales outside those markets.
The company also faces product liability and other litigation, including acetaminophen, phenylephrine, Zantac-related and benzoyl peroxide matters, for which it states it cannot reasonably estimate potential liability in several cases. The company has no current CEO, with an Interim Chief Executive Officer serving.
02—Key points
Key Highlights
- Net sales fell 4.0% to $3.84 billion in the quarter, with organic sales down 4.2% on volume declines of 3.3% and unfavorable value realization of 0.9%.
- Operating income of $692 million compared with $154 million a year earlier, which included a $510 million Dr.Ci:Labo® impairment charge.
- Net income of $420 million ($0.22 per diluted share) versus $58 million ($0.03) in the prior-year quarter.
- Six-month operating cash flow rose to $1.05 billion from $727 million, driven largely by working capital timing.
- Board initiated a strategic alternatives review, overseen by a Strategic Review Committee, which may include optimizing the brand portfolio.
- Estimated incremental gross tariff exposure of approximately $150 million annualized, with mitigation efforts underway.
- Quarterly dividend paid at $0.205 per share, with the Board later declaring a $0.2075 per share dividend on July 30, 2025.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2025, Kenvue kept $0.11.
- Revenue$3.84B100.0%
- Cost of revenue−$1.58B41.1%
- Gross profit$2.26B58.9%
- Operating costs−$1.57B40.9%
- Operating income$692.0M18.0%
- Interest, other & tax−$272.0M7.1%
- Net income$420.0M10.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2025filed August 7, 2025Financial Statements
Q2 FY2025 against Q2 FY2024
| Line item | Q2 FY2025Q2 FY2024 | Change |
|---|---|---|
| Revenue | $3.84B$4.00B | −4.0% |
| Cost of Revenue | $1.58B$1.64B | −3.5% |
| Gross Profit | $2.26B$2.37B | −4.4% |
| R&D Expenses | $91.00M$105.00M | −13.3% |
| SG&A Expenses | $1.50B$1.64B | −8.3% |
| Operating Income | $692.00M$154.00M | +349.4% |
| Interest Expense | $107.00M$106.00M | +0.9% |
| Net Income | $420.00M$58.00M | +624.1% |
| EPS (Basic) | $0.22$0.03 | +633.3% |
| EPS (Diluted) | $0.22$0.03 | +633.3% |
| Shares Outstanding (Basic) | 1.92B1.92B | +0.2% |
| Shares Outstanding (Diluted) | 1.93B1.92B | +0.4% |
05—Questions
Frequently Asked Questions
Why did reported operating income increase so sharply in the quarter?
The prior-year quarter included a $510 million impairment charge, mostly for the Dr.Ci:Labo® business, and no impairments were recognized in the current quarter. Excluding that charge, the filing attributes lower SG&A to a $50 million decrease in Separation-related costs, lower brand support expense and savings from Our Vue Forward, partly offset by lower gross profit.
What is driving the sales decline?
Organic sales declined 4.2% in the quarter, mainly from volume decreases of 3.3% tied to softer allergy and sun seasons in North America, trade inventory fluctuations and shipment timing in China. Unfavorable value realization of 0.9% reflected strategic price investments, primarily in Skin Health and Beauty.
What is the status of the strategic review?
In July 2025, Kenvue announced that its Board had initiated a comprehensive review of strategic alternatives and established a Strategic Review Committee. The review will consider a broad range of alternatives, including optimizing the brand portfolio, and the company states it cannot assure that the review will result in any transaction or outcome.
How is the company managing its debt and liquidity?
In May 2025 Kenvue issued $750 million of 4.85% Senior Notes due 2032 and repaid $750 million of 5.50% Senior Notes due 2025. Total debt was $8.61 billion at June 29, 2025, with $4.0 billion of revolver capacity expiring in March 2029 and cash of $1.07 billion. Management believes existing resources are sufficient for at least the next 12 months.
What litigation risks does the filing highlight?
The filing describes product liability and other suits, including acetaminophen, phenylephrine, Zantac-related and benzoyl peroxide cases, for which the company says it cannot reasonably estimate potential liability in several matters. Talc claims in the United States and Canada are indemnified by J&J under the Separation Agreement, while talc liabilities for products sold outside those markets remain with Kenvue.
06—Continue