Kenvue's 'Iconic Brands' Fuel Impressive Quarter Success

Kenvue, the consumer health business, attributes its strong performance in the quarter to the power of its renowned brands. Formerly a division of Johnson & Johnson, Kenvue now operates as an independent company and holds ownership of iconic brands such as Listerine, Neutrogena, and Band-Aid. With this transition, Kenvue has emerged as the world's leading consumer health company solely focused on revenue generation.

The business experienced a weaker start to the cold and flu season than expected, which typically drives sales for brands like Sudafed and Benadryl during this time of year. However, despite slow sales in this segment, Kenvue considered its third quarter to be successful.

In the third quarter, net sales increased by 3.3% compared to the same period last year, reaching $3.92bn (£3.24bn). Although there was a decline in volume by 3.5%, this was primarily attributed to the impact of the Chinese business and strategic adjustments to the product portfolio. On the other hand, the company's value realization grew by 7.1%, which includes increased prices and adjustments to the product mix.

"Our brands have proved to be highly appealing to consumers," stated Thibaut Mongon, the CEO, although he admitted that Kenvue's performance in certain areas of its portfolio is not meeting expectations.

While the company experienced a decline in sales for its cold and flu products, its self-care portfolio, which consists of brands like Nicorette and Imodium, demonstrated strong performance. This segment of the business witnessed a 1.2% increase in volume growth during the quarter. Overall, reported net sales showed a growth of 6.4%.

The significant growth in this segment can be attributed to its success in gaining market share through effective brand activation strategies. Additionally, notable innovations in brands like Nicorette, which focuses on helping smokers quit, have been highlighted.

Moving forward, the company plans to expand the influence of its well-known brands in order to achieve consistent and lasting growth. Mongon stated that this will be accomplished by continually introducing innovations that cater to unmet consumer health needs across its entire product portfolio.

Furthermore, he emphasized that the introduction of innovative products, like the Hydro Boost moisturizing gel face cream implemented in the German market under the Neutrogena brand, has a positive impact not only on the new product but also boosts the overall brand value.

Moreover, the company has made a firm commitment to further investing in brand marketing, as they recognize its crucial role in driving growth.

Kenvue has adjusted its sales and earnings projections for the full year, despite leadership referring to the quarter as "healthy." Initially anticipating a year-over-year sales growth rate of 4.5% to 5.5%, the company now expects it to fall within the range of 4% to 4.5%. In contrast, rival consumer health business Haleon has raised its net revenue growth expectations. Following its half-year results in August, Haleon now forecasts organic revenue growth to be between 7% to 8%, compared to the previously projected range of 4% to 6%.

Haleon, like Kenvue, was previously a division of a major pharmaceutical company before becoming a separate entity focused on consumer health. It officially separated from GSK in July 2022.