Kenvue, the parent company of Neutrogena, posted disappointing third-quarter results on Thursday, marking its fifth consecutive quarter of year-over-year sales declines in its core skin health and beauty division. The company reported a 4.2% drop in sales, amounting to $1.07 billion, missing analysts’ expectations of $1.10 billion, according to data from LSEG. The decline was attributed to weaker demand for sunscreens and related skincare products during the quarter.
To address the downturn, Kenvue is ramping up efforts to boost sales by increasing its marketing spend and supplying more skincare products to retail stores. The company plans to invest 20% more in advertising this year than in 2023, focusing on engaging younger audiences, particularly Gen Z, through social media campaigns.
The disappointing performance in Kenvue’s skin health division has drawn criticism from activist investor Starboard Value, which has taken an undisclosed stake in the company and is urging a renewed focus on improving results in the skincare sector. While Kenvue’s flagship skin brands, including Neutrogena, Clean & Clear, and Aveeno, have struggled, its self-care brands, such as Tylenol and Benadryl, have seen growth.
Despite the challenges, Kenvue CEO Thibaut Mongon expressed confidence in the company’s strategy, highlighting the importance of time in executing such large-scale transformations. Analyst Keith Devas of Jefferies echoed this sentiment, noting that the turnaround process would take time but remains hopeful that increased marketing spend will reinvigorate growth.
For the full year, Kenvue now expects annual net sales to grow closer to the lower end of its original forecast range of 1% to 3%. The company reaffirmed its earnings per share guidance of $1.10 to $1.20, in line with analyst expectations of $1.14 per share.
While total revenue for the quarter fell slightly to $3.90 billion, below the expected $3.93 billion, strong sales from Kenvue’s self-care products helped mitigate the losses in its skincare segment. The company reported an adjusted profit of 28 cents per share, matching analysts’ consensus of 27 cents per share.
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