01—Abstract
Summary
Summary of the 10-Q filed May 7, 2026. Cited figures are marked; the original filing is the authoritative source.
Kenvue Inc. reported net sales of $3.9 billiona for the fiscal three months ended March 29, 2026, up $168 million, or 4.5%, from $3.7 billion a year earlier.
Organic sales rose 0.7%, driven by favorable value realization of 1.0% and volume-related decreases of 0.3%, while favorable foreign currency changes contributed 3.8%. Operating income rose to $767 millionb from $558 million, and net income increased to $474 million, or $0.25 per diluted share, from $322 million, or $0.17 per diluted share. Gross profit margin expanded 90 basis points to 58.9%, and selling, general, and administrative expenses fell to 37.2% of net sales from 41.1%.
The pending transaction with Kimberly-Clark remains the central strategic event. Under the Merger Agreement signed November 2, 2025, Kenvue shareholders will receive 0.14625 shares of K-C common stock plus $3.50c in cash per share, with Kenvue shareholders expected to own approximately 46% of the combined company. Shareholders approved the merger on January 29, 2026, and the HSR waiting period expired February 4, 2026.
Closing is expected in the second half of 2026, subject to foreign regulatory approvals and other customary conditions. The Company recorded $16 milliond of Pending Transaction and other related costs in the quarter. Balance sheet and cash flow items were steady.
Cash and cash equivalents were $1,075 million, total debt was $8,661 million, and operating cash flow was $489 million, compared with $428 million a year earlier. The Company repaid $750 million of 5.35% Senior Notes due 2026 and paid $398 million in dividends.
The Board launched a 2026 Restructuring Initiative expected to cost approximately $250 million in fiscal 2026 and yield about $200 million of annualized pre-tax gross cost savings. The Company also estimated gross tariff exposure of approximately $90 million annualized and disclosed ongoing product liability litigation involving acetaminophen, talc, and Zantac, among other matters.
02—Key points
Key Highlights
- Net sales rose 4.5% to $3.909 billion; organic sales grew 0.7%, with foreign currency contributing 3.8%.
- Net income rose 47.2% to $474 million, or $0.25 per diluted share, versus $322 million, or $0.17 per diluted share, a year earlier.
- Operating income increased to $767 million from $558 million; gross profit margin expanded 90 basis points to 58.9%.
- Segment adjusted operating income rose 21.7% to $1.092 billion, led by Skin Health and Beauty (up 82.6% to $168 million) and Essential Health (up 25.1% to $299 million).
- Pending Transaction with Kimberly-Clark: Kenvue shareholders will receive 0.14625 K-C shares plus $3.50 cash per share; closing expected in the second half of 2026 pending foreign regulatory approvals.
- Launched a 2026 Restructuring Initiative with expected pre-tax charges of approximately $250 million in fiscal 2026 and approximately $200 million of annualized gross cost savings; $78 million was recorded in the quarter.
- Cash flow from operations was $489 million, and the Company repaid $750 million of 5.35% Senior Notes; total debt stood at $8.661 billion at quarter-end.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2026, Kenvue kept $0.12.
- Revenue$3.91B100.0%
- Cost of revenue−$1.61B41.1%
- Gross profit$2.30B58.9%
- Operating costs−$1.53B39.3%
- Operating income$767.0M19.6%
- Interest, other & tax−$293.0M7.5%
- Net income$474.0M12.1%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 7, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $3.91B$3.74B | +4.5% |
| Cost of Revenue | $1.61B$1.57B | +2.2% |
| Gross Profit | $2.30B$2.17B | +6.2% |
| R&D Expenses | $84.00M$99.00M | −15.2% |
| SG&A Expenses | $1.45B$1.54B | −5.5% |
| Operating Income | $767.00M$558.00M | +37.5% |
| Interest Expense | $106.00M$107.00M | −0.9% |
| Net Income | $474.00M$322.00M | +47.2% |
| EPS (Basic) | $0.25$0.17 | +47.1% |
| EPS (Diluted) | $0.25$0.17 | +47.1% |
| Shares Outstanding (Basic) | 1.92B1.91B | +0.2% |
| Shares Outstanding (Diluted) | 1.92B1.93B | −0.2% |
05—Questions
Frequently Asked Questions
What is the status of the pending merger with Kimberly-Clark?
Kenvue shareholders approved the Merger Agreement on January 29, 2026, and the HSR waiting period expired on February 4, 2026. The transaction remains subject to a number of foreign regulatory approvals and other customary closing conditions and is expected to close in the second half of 2026. Upon completion, Kenvue shareholders are expected to own approximately 46% of the combined company on a fully diluted basis.
What drove the increase in net income this quarter?
Net income rose to $474 million from $322 million, supported by higher gross profit ($2.302 billion versus $2.168 billion) and lower selling, general, and administrative expenses ($1.453 billion versus $1.537 billion). Segment adjusted operating income increased 21.7%, with the Skin Health and Beauty and Essential Health segments showing the largest percentage gains. Provision for taxes also rose to $198 million from $136 million.
How is the 2026 Restructuring Initiative expected to affect the company?
The Board approved the initiative on February 17, 2026 to optimize the operating model, transform the supply chain, and reduce complexity. The Company expects pre-tax restructuring expenses and other charges of approximately $250 million in fiscal 2026 and annualized pre-tax gross cost savings of approximately $200 million upon completion. The quarter included $78 million of charges, and a majority of the costs are expected to be paid in cash.
What is the company's exposure to tariffs and litigation?
The Company estimates gross tariff exposure of approximately $90 million annualized. Following a February 2026 U.S. Supreme Court ruling on IEEPA tariffs, the timing and amount of potential refunds remain uncertain. Kenvue faces ongoing product liability litigation involving acetaminophen, Johnson's Baby Powder talc claims, and Zantac, among other matters. The Company says it has accrued for probable and estimable matters and that the ultimate outcome of legal proceedings is not expected to have a material adverse effect on its financial position, though some outcomes could affect results of operations and cash flows.
06—Continue