Kenvue (NYSE: KVUE) reported fiscal Q3 2026 net sales of $3.886
billion, up 3.2% year over year, while diluted EPS rose 5% to $0.22 from
$0.21. For the quarter ended September 27, organic sales grew 2.9%, led
by Self Care, while productivity and cost actions supported margin
expansion and nine-month free cash flow increased to $1.6 billion.
Core Financial Results
Sales growth was primarily organic: the 3.2% reported increase
consisted of 2.9% organic growth and a 0.3% foreign-currency benefit.
Organic growth was balanced between a 1.6% volume increase and 1.3%
favorable value realization.
Profit increased faster than sales at the operating level, helped by
supply-chain productivity, restructuring and other cost actions.
However, the higher effective tax rate limited the resulting growth in
net income and EPS.
MetricQ3 2026Q3 2025Year-over-Year ChangeNet sales$3.886 billion$3.764 billion+3.2%Gross profit$2.314 billion$2.226 billionApprox. +4.0%Gross profit margin59.5%59.1%+40 bpsAdjusted gross profit margin61.5%61.2%+30 bpsOperating income$706 million$629 millionApprox. +12.2%Operating income margin18.2%16.7%+150 bpsAdjusted operating income margin21.9%21.5%+40 bpsNet income$430 million$398 millionApprox. +8.0%Diluted EPS$0.22$0.21+5%Adjusted diluted EPS$0.29$0.28+4%
Adjusted figures are non-GAAP measures and exclude specified items
including restructuring, separation-related and pending-transaction
costs.
Business and Segment
Performance
Self Care was the main growth engine, while Skin Health and Beauty
was nearly flat on a reported basis and declined organically. Essential
Health delivered growth across all regions, supported more by volume
than pricing or mix.
SegmentReported Sales ChangeOrganic Sales ChangeVolumeValue RealizationSelf Care+5.9%+5.4%+3.4%+2.0%Skin Health and Beauty+0.1%-0.5%-1.7%+1.2%Essential Health+2.5%+2.5%+2.0%+0.5%
Self Care benefited from favorable inventory comparisons in
Asia-Pacific, rising flu incidence in the region and commercial
execution behind products including Motrin, Nicorette and Pepcid. U.S.
consumption trends improved sequentially, and Tylenol gained market
share despite lower seasonal incidence and continued category
softness.
Skin Health and Beauty remained the weak point. Distribution losses
and the timing of U.S. promotions, along with retailer negotiations in
Europe, outweighed growth in Hair Care. Rogaine recorded a fourth
consecutive quarter of market-share gains, while OGX maintained
momentum.
Essential Health grew in every region. Baby Care, Women’s Health and
Wound Care contributed, supported by product launches, distribution
expansion and retailer activity involving brands such as Johnson’s Baby,
Stayfree, o.b. and BAND-AID.
Margin
Expansion Outpaced EPS Growth as the Tax Rate Rose
Gross margin benefited from global supply-chain productivity, U.S.
tariff refunds and favorable value realization. Inflation and
unfavorable transactional foreign exchange partially offset those
gains.
Operating margins also benefited from cost optimization under the
2026 Restructuring Initiative and Our Vue Forward. Quarterly
restructuring expense declined to $33 million from $84 million, although
Kenvue increased brand support year over year. The company still expects
approximately $250 million of pretax restructuring expenses and other
charges for fiscal 2026.
Operating income rose approximately 12.2%, but net income increased
about 8% and diluted EPS rose 5%. The main constraint was the GAAP
effective tax rate, which increased to 29.4% from 24.3% because
favorable discrete return-to-provision adjustments were smaller than in
the prior year. The adjusted tax rate also rose, to 24.7% from 24.0%.
Net interest expense declined modestly to $89 million from $93
million.
Cash Flow and Balance Sheet
Cash-flow figures cover the fiscal nine months ended September 27,
2026, rather than the third quarter alone. Operating cash flow increased
to $1.9 billion from $1.3 billion, driven by higher net income and a
lower use of working capital. Capital expenditures declined to $0.3
billion from $0.4 billion, lifting non-GAAP free cash flow to $1.6
billion from $1.0 billion.
Kenvue ended the period with $1.0 billion in cash and cash
equivalents, compared with $1.1 billion on December 28, 2025. Total debt
declined to $8.2 billion from $8.5 billion over the same period.
Management’s View
CEO Kirk Perry attributed the quarter’s performance to disciplined
execution, productivity programs and continued investment in brands and
innovation. Management said the business transformation launched in the
prior year remained on track and also highlighted the pending
combination with Kimberly-Clark.
Because of that pending transaction, Kenvue did not provide
forward-looking guidance and did not hold a quarterly conference
call.
Recent Insider Transactions
The supplied insider data reports purchases of 251,874 shares across
nine transactions and sales of 42,191 shares across two transactions
during the last six months, resulting in net purchases of 209,683
shares. However, the most recent detailed entries were dominated by
stock awards rather than open-market purchases, so the transaction types
should be distinguished when interpreting the aggregate data.
DateInsiderRoleTransactionPrice per ShareReported ValueOct. 2, 2026Heather HowlettChief Financial OfficerStock award/grant$17.20$187,153Oct. 2, 2026Meredith StevensChief Operating OfficerStock award/grant$17.20$614,969Oct. 2, 2026Caroline TillettOfficerStock award/grant$17.20$425,390Oct. 2, 2026Matthew OrlandoGeneral CounselStock award/grant$17.20$614,969Oct. 2, 2026Carlton LawsonOfficerStock award/grant$17.20$629,468June 10, 2026Heather HowlettChief Financial OfficerSale$18.10$66,988May 8, 2026Matthew OrlandoGeneral CounselSale$17.66$679,691
The supplied data did not disclose transaction types or values for
three other recent entries involving Michael Wondrasch, Meredith Stevens
and Anindya Dasgupta. No conclusion about management’s outlook can be
drawn solely from the awards or sales listed above.
Risks Investors Need to
Watch
- Skin Health and Beauty weakness: Organic sales
declined as volume fell 1.7%. Continued U.S. distribution losses,
promotion timing issues or prolonged retailer negotiations in Europe
could constrain companywide growth. - Margin benefits may not fully persist:
Productivity, tariff refunds and pricing supported margins this quarter,
but inflation, transactional currency pressure and higher brand spending
remained offsets. - Restructuring execution: Kenvue expects
approximately $250 million of pretax restructuring and related charges
in fiscal 2026. The financial benefit depends on successfully
simplifying operations and transforming the supply chain. - Transaction-related uncertainty: The pending
Kimberly-Clark combination could create disruption or unanticipated
costs. The absence of quantitative guidance and a quarterly conference
call also limits visibility into near-term expectations.
Summary
Kenvue’s fiscal third quarter combined organic growth with wider
margins and improved year-to-date cash generation. Self Care and
Essential Health drove the sales increase, while Skin Health and Beauty
remained the principal operating weakness. Investors’ next areas of
focus are whether the company can sustain productivity-led margin gains,
restore organic growth in beauty and skin care, execute its
restructuring plan and manage the pending Kimberly-Clark
transaction.
