Kenvue's Q4 2024: Discrepancies in Skin Health Recovery, China Strategy, and Self-Care Margins

These are the key contradictions discussed in Kenvue's latest 2024Q4 earnings call, specifically including: Skin Health recovery expectations, China market strategy, Skin Health and Beauty segment performance and expectations, and Self-Care segment margin trajectory:



Organic Sales and Growth Challenges:
- Kenvue reported organic sales growth of 1.5% for the year 2024, below expectations.
- This was due to lower-than-expected incidents of cough, cold, and flu, negatively impacting the pediatric pain franchise and a reduction in distributor orders in Asia Pacific, particularly in China.

Expansion and Investment in Brands:
- Kenvue increased its total brand investment by about 20% in 2024 to drive brand growth.
- This investment was supported by a higher advertising budget and increased presence across consumer and healthcare professional channels.

Operational Efficiency and Cost Reduction:
- The company expanded its adjusted gross margin to 60.4%, up 200 basis points year-over-year.
- This was driven by strong productivity enhancements in operations and a strategic initiative to become a more agile organization with a leaner cost structure.

Future Outlook and Strategic Initiatives:
- Kenvue expects organic sales to grow between 2% to 4% in 2025, with growth accelerating in the second half of the year.
- This positive outlook is supported by the rollout of a new operating model, increased innovation, and strategic pricing and promotional strategies.