Kenvue Inc.

Second-quarter organic sales declined 4.2%. Adjusted gross margin contracted 70 basis points to 60.9%, adjusted operating margin contracted 10 basis points to 22.7%, and adjusted diluted EPS was $0.29 versus $0.32 a year ago. Adjusted net income was $560 million, and below-the-line items were unfavorable year over year, with net interest expense up about $2 million to $94 million and the adjusted tax rate at 26.9% versus 25.7%. For 2025, Kenvue now expects organic sales down low single digits, about neutral currency impact, adjusted operating margin to contract versus last year, tariff impact of about $150 million annualized gross and below that in 2025, and adjusted diluted EPS of $1.00 to $1.05 including a low-single-digit currency drag.

Kirk Perry framed the quarter as below expectations and said the company must move with urgency, simplify the portfolio, and sharpen execution. He emphasized consumer-centric brand building, better e-commerce execution, fewer and bigger innovation bets, and a more choiceful allocation of resources to the biggest brands, markets, and initiatives. His tone was urgent but confident, repeatedly saying the issues are fixable and that the team has turned around similar businesses before.

Amit Banati said the company has healthy gross margins but sees room to expand margins over time through supply chain productivity, procurement, network optimization, planning, and digitization. He also pointed to SG&A above peer benchmarks because of separation-related costs, plus opportunities to improve working capital and cash conversion. On the quarter, he cited the 4.2% organic sales decline, 60.9% gross margin, 22.7% adjusted operating margin, and $0.29 adjusted EPS, and said Q2 weakness came from softer categories, seasonal and inventory issues, U.S. pricing actions, and FX.

Analysts focused on the timing and scope of the turnaround, especially how much of the complexity could be reduced quickly versus through strategic portfolio changes. Management said the Board review is broad and ongoing, but it is too early to specify restructuring actions or cash costs; the near-term focus is on removing obvious SKU complexity, improving e-commerce, and concentrating on the biggest brands and markets. Questions also probed the outlook for the back half, and Amit said July trends still look similar to Q2, with consumption ahead of organic sales but seasons remaining weak, while Q4 should benefit from easier comparisons to last year’s trade accruals and China weakness.