Kenvue Inc.

Company Overview

Business Model: Kenvue Inc. is a global leader in consumer health, operating as the world’s largest pure-play consumer health company by revenue, with $15.1 billion in Net sales in fiscal year 2025. The company leverages science, consumer insights, and a digital strategy to empower consumers in their daily health and wellness routines. Its differentiated portfolio of iconic brands, including Aveeno, BAND-AID Brand, Johnson’s, Listerine, Neutrogena, Nicorette, Tylenol, and Zyrtec, is backed by scientific evidence and recommended by healthcare professionals. Kenvue Inc.'s business is structured around three reportable segments: Self Care, Skin Health and Beauty, and Essential Health, connecting with consumers across North America, Asia Pacific, Europe, Middle East, and Africa, and Latin America. The company's marketing organization utilizes precision marketing, e-commerce, and digital capabilities, while its research and development focuses on multi-disciplinary scientific expertise and engagement with healthcare professionals to drive innovation.

Market Position: Kenvue Inc. holds a leading position as the world's largest pure-play consumer health company by revenue. Its portfolio comprises iconic and trusted brands that are leaders in their respective categories, recognized globally and regionally. The company operates in a large and dynamic market, competing with well-established multinational corporations, smaller regional companies, private-label brands, generic over-the-counter manufacturers, and emerging niche-oriented brands. Kenvue Inc.'s global scale and brand breadth are complemented by its capabilities and digital strategy, enabling it to capitalize on market trends.

Recent Strategic Developments:

• Proposed Transaction with Kimberly-Clark Corporation: On November 2, 2025, Kenvue Inc. entered into a Merger Agreement with Kimberly-Clark Corporation. Under the terms, Kimberly-Clark Corporation will acquire all outstanding shares of Kenvue Inc. for a combination of stock and cash. Kenvue Inc. shareholders are expected to receive 0.14625 shares of Kimberly-Clark Corporation common stock and $3.50 in cash for each Kenvue Inc. share. Post-transaction, current Kenvue Inc. shareholders are expected to own approximately 46% of the combined company, with Kimberly-Clark Corporation shareholders owning approximately 54%. The transaction received shareholder approvals from both companies on January 29, 2026, and the Hart-Scott-Rodino Antitrust Improvements Act waiting period expired on February 4, 2026. The Proposed Transaction is expected to close in the second half of 2026, subject to foreign regulatory approvals.
• Separation from Johnson & Johnson: Kenvue Inc. completed its transition to a fully independent public company in August 2023, following an initial public offering in May 2023 and an Exchange Offer by Johnson & Johnson. Johnson & Johnson completed an additional Debt-for-Equity Exchange in May 2024 and no longer owns Kenvue Inc. common stock.
• Restructuring Initiatives: Kenvue Inc. approved a multi-year restructuring initiative, "Our Vue Forward," in May 2024, aimed at optimizing its operating model, transforming its supply chain, reducing complexity, and driving operational efficiencies. By the end of fiscal year 2025, the company substantially completed all actions under this initiative, realizing annualized pre-tax gross cost savings in excess of $350 million, which were largely reinvested in growth opportunities. A new restructuring initiative was approved on February 17, 2026, with expected pre-tax charges of approximately $250 million in fiscal year 2026.
• Headquarters Relocation: Kenvue Inc. began operating out of its new global and North America corporate headquarters in Summit, New Jersey, in March 2025, with the relocation continuing through 2026 for the new research and development building. The former corporate headquarters in Skillman, New Jersey, was sold in the fiscal three months ended December 28, 2025, resulting in a $17 million gain.

Geographic Footprint: Kenvue Inc. markets its products across more than 165 countries worldwide. As of December 28, 2025, the company operates approximately 120 sites globally, with 33 owned and 87 leased or with rights to use. This includes 11 sites in nine U.S. states and 109 sites in 58 other countries and territories across Europe, Middle East, and Africa, Asia-Pacific, and Latin America.

Financial Performance

Revenue Analysis

Profitability Metrics:

• Gross Margin: 58.1% (expanded 10 basis points from 58.0% in FY2024)
• Operating Margin: 16.0%
• Net Margin: 9.7%

Investment in Growth:

• R&D Expenditure: $382 million (2.53% of revenue)
• Capital Expenditures: $475 million (purchases of property, plant, and equipment)
• Strategic Investments: Savings from the 2024 Multi-Year Restructuring Initiative were largely reinvested behind advertising, product promotion, and healthcare professional engagement.

Business Segment Analysis

Self Care

Financial Performance:

• Revenue: $6.378 billion (-2.3% YoY)
• Organic Sales Change: -3.0% YoY (Volume -3.4%, Price/Mix +0.4%)
• Segment Adjusted Operating Income: $2.109 billion (-2.9% YoY)
• Operating Margin: 33.1% Key Growth Drivers:
• Volume decreases, primarily in China and the United States, were driven by softer seasons for Allergy Care, Cough and Cold, and pediatric Pain Care, coupled with changes in shipment timing due to lower inventory replenishment following prior-year inventory builds.
• Growth in Smoking Cessation in Europe, Middle East, and Africa partially offset these decreases.
• Favorable value realization was primarily due to new pricing actions, partially offset by strategic price investments.
• The decrease in operating income was influenced by volume-related Net sales decreases, volume deleverage at internal manufacturing sites, unfavorable foreign currency changes, net input cost inflation, and tariffs. These were partially offset by lower brand support expenses, benefits from supply chain optimization initiatives, and administrative expense reductions from "Our Vue Forward." Product Portfolio: Benadryl, Calpol, Motrin, Nicorette, Rhinocort, Tylenol, Zarbee’s, and Zyrtec. Market Dynamics: The segment focuses on providing accessible healthcare solutions through over-the-counter medicines and naturally inspired products, including digital diagnostics and telemedicine offerings.

Skin Health and Beauty

Financial Performance:

• Revenue: $4.114 billion (-3.0% YoY)
• Organic Sales Change: -2.7% YoY (Volume -1.8%, Price/Mix -0.9%)
• Segment Adjusted Operating Income: $477 million (-21.4% YoY)
• Operating Margin: 11.6% Key Growth Drivers:
• Volume decreases were attributed to changes in shipment timing (lower inventory replenishment in China) and trade inventory reductions (retailer inventory management in the United States).
• Performance in the United States was further impacted by distribution losses, underperformance in e-commerce, competitive pressures leading to market share losses, and a softer sun season.
• Unfavorable value realization was due to strategic price investments.
• The decrease in operating income was primarily driven by volume-related Net sales decreases, unfavorable value realization, higher brand support expenses, net input cost inflation, unfavorable foreign currency changes, and tariffs. These were partially offset by benefits from supply chain optimization initiatives and administrative expense reductions from "Our Vue Forward." Product Portfolio: Aveeno, Dr.Ci:Labo, Le Petit Marseillais, Lubriderm, Neutrogena, OGX, and Rogaine. Market Dynamics: The portfolio emphasizes dermatological solutions, leveraging partnerships with skin experts and scientific expertise. The segment faces slower growth in broader skincare categories, shifts in consumer sentiment in China, and changing shopping patterns in the region.

Essential Health

Financial Performance:

• Revenue: $4.632 billion (-1.2% YoY)
• Organic Sales Change: -0.7% YoY (Volume -1.2%, Price/Mix +0.5%)
• Segment Adjusted Operating Income: $1.176 billion (+1.2% YoY)
• Operating Margin: 25.4% Key Growth Drivers:
• Volume decreases were due to trade inventory reductions (retailer inventory management in the United States, particularly in Oral Care and Wound Care) and market deceleration and competitive pressures in Oral Care in North America.
• These decreases were partially offset by growth across product categories in Latin America.
• Favorable value realization was primarily due to new pricing actions, partially offset by strategic price investments.
• The increase in operating income was primarily driven by benefits from supply chain optimization initiatives, administrative expense reductions from "Our Vue Forward," lower brand support expenses, and favorable value realization. These were partially offset by volume-related Net sales decreases, unfavorable foreign currency changes, net input cost inflation, and tariffs. Product Portfolio: BAND-AID Brand, Carefree, Desitin, Johnson’s, Listerine, o.b. tampons, and Stayfree. Market Dynamics: The Essential Health brands aim to raise personal care standards across baby care, wound care, oral care, and menstrual health categories.

Capital Allocation Strategy

Shareholder Returns:

• Share Repurchases: Kenvue Inc. repurchased approximately 9.179 million shares of its common stock for $197 million during the fiscal twelve months ended December 28, 2025, prior to entering into the Merger Agreement with Kimberly-Clark Corporation. The Board had authorized a program to repurchase up to 27,000,000 shares, with no expiration date, intended to offset dilution from equity-based awards. However, under the Merger Agreement, Kenvue Inc. is restricted from further repurchases without Kimberly-Clark Corporation's consent.
• Dividend Payments: Kenvue Inc. paid $1.581 billion in dividends during the fiscal twelve months ended December 28, 2025. Quarterly dividends declared were $0.205, $0.205, $0.2075, and $0.2075 per share. The Board declared a dividend of $0.2075 per share on January 28, 2026, payable on February 25, 2026. Kenvue Inc. expects to continue paying quarterly cash dividends, subject to Board discretion.

Balance Sheet Position:

• Cash and Equivalents: $1.062 billion as of December 28, 2025.
• Total Debt: $8.524 billion as of December 28, 2025.
• Net Cash Position: -$7.462 billion as of December 28, 2025.
• Credit Rating: Kenvue Inc. maintains investment grade credit ratings with Moody’s Ratings and Standard & Poor’s Global Ratings Services.
• Debt Maturity Profile:
  • Current portion of long-term debt: $750 million.
  • Commercial paper outstanding: $699 million (net of discount).
  • Long-term debt: $7.071 billion.
  • Senior Notes outstanding: $7.687 billion (net of discounts).
  • Repaid $750 million of 5.50% Senior Notes due 2025.
  • Issued $750 million of 4.85% Senior Notes due 2032.
  • Scheduled principal payments for Senior Notes: $750 million in 2026, $1.0 billion in 2028, $1.0 billion in 2030, and $5.0 billion thereafter.
  • Revolving Credit Facility: $4.0 billion, expiring March 2029, with no outstanding balances as of December 28, 2025.

Cash Flow Generation:

• Operating Cash Flow: $2.197 billion in fiscal year 2025, an increase of $428 million from $1.769 billion in fiscal year 2024.
• Free Cash Flow: $1.722 billion in fiscal year 2025 (Operating Cash Flow of $2.197 billion minus Capital Expenditures of $475 million).
• Cash Conversion Metrics: The increase in operating cash flow was primarily driven by net changes in working capital balances, specifically Accounts payable and accrued liabilities due to payment timing, and Trade receivables due to sales timing relative to collections.

Operational Excellence

Production & Service Model: Kenvue Inc. operates with a global and balanced manufacturing footprint, which provides flexibility and agility, leveraging economies of scale and global supply chain agreements. The company is focused on modernizing and optimizing its supply chain operations to better connect with and serve customers. Its end-to-end, digitally connected supply chain ecosystem is designed for flexibility and agility, prioritizing reliability and resiliency. In fiscal year 2025, approximately 60% of Kenvue Inc.'s sales volume was delivered by its in-house manufacturing facilities, with the remainder supplied by an extensive network of external third-party manufacturers. The company maintains a rigorous approach to product safety and quality control, investing in quality systems and data analytics platforms for proactive quality management.

Supply Chain Architecture: Key Suppliers & Partners: Kenvue Inc. maintains global operations with a vast supplier base. Principal raw materials include resins, silicon, pulp and corn derivatives, paper, agrochemicals, vegetable oils, and oleochemicals. While the majority of raw and packaging materials are purchased from multiple third-party sources, certain key components, such as active pharmaceutical ingredients (APIs) for Tylenol, are sourced from single or limited suppliers. Suppliers are expected to meet Kenvue Inc.'s quality standards and undergo regular quality audits. Facility Network:

• Manufacturing: Kenvue Inc. utilizes both in-house manufacturing sites and an extensive network of external manufacturing facilities.
• Research & Development: The company operates a global network of innovation and development hubs strategically located near consumers in key geographic markets. A new research and development building in Summit, New Jersey, is expected to be completed in 2026.
• Distribution: Kenvue Inc.'s distribution network is designed to respond to complex consumer and customer demand. The majority of its distribution centers are operated in partnership with expert third-party operators, leveraging their scale, expertise, and technology platforms, all while adhering to Kenvue Inc.'s rigorous quality compliance standards. Operational Metrics: In-house manufacturing contributed approximately 60% of Kenvue Inc.'s sales volume in fiscal year 2025. The 2024 Multi-Year Restructuring Initiative has resulted in annualized pre-tax gross cost savings exceeding $350 million as of the end of fiscal year 2025.

Market Access & Customer Relationships

Go-to-Market Strategy: Distribution Channels: Kenvue Inc. employs a global marketing approach, tailoring strategies and campaigns to meet the distinctive needs of consumers in local markets. The company leverages precision marketing, e-commerce, and broader digital capabilities to enhance brand relevance and stimulate demand. This includes online sales channels and digital platforms, such as the Zyrtec AllergyCast app and the Neutrogena Skin360 app. Kenvue Inc. also establishes strategic partnerships with key retailers across multiple markets and channels. Customer Portfolio: Kenvue Inc. has cultivated long-term relationships with many of its key customers. In fiscal year 2025, one customer accounted for approximately 12% of total Net sales, and the top 10 customers collectively represented approximately 41% of total Net sales. This indicates a degree of customer concentration, with large-format customers and alliances possessing significant bargaining strength. Geographic Revenue Distribution:

• North America: 50.0% of total revenue ($7.5 billion)
• Europe, Middle East, and Africa: 24.6% of total revenue ($3.721 billion)
• Asia-Pacific: 18.3% of total revenue ($2.775 billion)
• Latin America: 9.1% of total revenue ($1.369 billion) Growth Markets: Kenvue Inc. identifies opportunities in emerging markets with a growing middle class, where consumers are increasingly seeking solutions that meet their health goals.

Competitive Intelligence

Market Structure & Dynamics

Industry Characteristics: The consumer health and personal care sectors are characterized as large and dynamic, with a significant number of competitors. Key trends driving industry evolution include a heightened focus on preventative care, demand for science-backed solutions, a paradigm shift in beauty towards health, an aging global population, premiumization, a growing middle class in emerging markets, and the rise of digital ecosystems creating new opportunities for personalized health solutions. Competitive Positioning Matrix:

Direct Competitors

Primary Competitors:

• Self Care: Haleon, Procter & Gamble, Reckitt Benckiser Group, and private-label brands.
• Skin Health and Beauty: Beiersdorf, Estée Lauder, L’Oréal, Procter & Gamble, Unilever, and private-label brands.
• Essential Health: Church & Dwight, Colgate-Palmolive, Haleon, Kimberly-Clark Corporation, Procter & Gamble, and private-label brands. Emerging Competitive Threats: The company faces competition from smaller, agile regional companies that have benefited from e-commerce growth and focus extensively on direct-to-consumer or other non-traditional, digital business models. Competitive Response Strategy: Kenvue Inc. aims to maintain and enhance its brand reputation, develop new products with differentiated benefits, expand its presence in existing and emerging distribution channels, adapt to evolving scientific knowledge, manage inventories effectively, and refine its approach to manufacturing, marketing, and sales.

Risk Assessment Framework

Strategic & Market Risks

• Market Dynamics: Kenvue Inc. operates in highly competitive product markets, facing multinational corporations, regional players, private-label brands, and generic products. The company's success is dependent on its ability to anticipate and respond to rapidly changing market trends, consumer and customer preferences, and the evolving retail landscape, including increased retail trade concentration and the growth of e-commerce. Damage to brand reputation from negative publicity, whether valid or not, could impact brand loyalty.
• Technology Disruption: The implementation of Kenvue Inc.'s digital strategy, including new offerings and connected health solutions, exposes it to risks such as technical failures, information security incidents, consumer privacy concerns, and rapid technological changes. The development, deployment, use, and regulation of artificial intelligence in internal processes, manufacturing, products, and services also present numerous risks and challenges, including unintended consequences, erroneous outputs, and potential intellectual property or privacy compromises.
• Customer Concentration: A significant portion of Kenvue Inc.'s Net sales is concentrated among a few large customers (one customer accounted for approximately 12% and the top 10 for approximately 41% of total Net sales in FY2025), giving them substantial bargaining power and potentially leading to pricing pressures or reduced sales.

Operational & Execution Risks

• Supply Chain Vulnerabilities: Kenvue Inc. relies on third parties for manufacturing, supply, and distribution. Disruptions to internal or third-party operations due to regulatory actions, quality issues, labor disputes, natural disasters, raw material shortages, geopolitical events, or cybersecurity incidents could lead to product shortages, declining sales, and increased costs. The reliance on single-source or limited suppliers for certain key components, such as APIs for Tylenol, exacerbates this risk.
• Capacity Constraints: While not explicitly stated as a current constraint, the reliance on third-party manufacturing and distribution implies potential capacity risks if these partners cannot meet demand or if Kenvue Inc. needs to rapidly scale.
• Talent Management: The ability to attract and retain a talented, highly skilled, and diverse workforce is critical. Competition for personnel, labor market challenges (wage inflation, shortages), and the impact of restructuring initiatives on employee morale and retention pose risks.
• Restructuring Execution: Kenvue Inc.'s restructuring programs, including "Our Vue Forward," may not fully achieve the expected cost savings or operating efficiencies, potentially impacting long-term growth and profitability.

Financial & Regulatory Risks

• Market & Financial Risks: Kenvue Inc. is exposed to inflationary pressures and volatility in the cost and availability of raw materials, energy, labor, and transportation. Inability to accurately forecast demand can lead to excess inventory or product shortages. Foreign currency fluctuations, particularly given extensive non-U.S. operations, can impact financial results. Changes to credit ratings or disruptions in credit markets could increase borrowing costs and limit liquidity. Impairment of goodwill and other intangible assets, as seen with the Dr.Ci:Labo business in FY2024 and the ORSL trade name in FY2025, could reduce net income. The company also carries substantial indebtedness.
• Regulatory & Compliance Risks: Kenvue Inc. is subject to a broad range of extensive and evolving government regulations globally, including those from the FDA, FTC, CPSC, OSHA, EPA, DEA, as well as international regulations like GDPR, PIPL, and REACH. Non-compliance or increased enforcement actions could lead to significant costs, fines, product recalls, reformulations, or market withdrawals. Concerns about the reliability, safety, or efficacy of products or ingredients (e.g., acetaminophen, talc, phenylephrine, benzoyl peroxide) have resulted in, and could continue to result in, litigation, regulatory action, and reputational damage.
• Legal Proceedings: Kenvue Inc. is involved in various lawsuits and governmental investigations concerning product liability, labeling, marketing, intellectual property, and environmental matters. These include ongoing litigation related to acetaminophen, talc-containing products (outside the U.S. and Canada), phenylephrine, and benzoyl peroxide. The outcomes of these proceedings are uncertain and could result in significant expenses, liabilities, and reputational harm.
• Tax Strategy: Changes in tax laws or regulations, such as the OECD's Pillar Two initiative, or increased audit scrutiny by tax authorities, could negatively impact Kenvue Inc.'s effective tax rate and financial condition.

Geopolitical & External Risks

• Geopolitical Exposure: Extensive global operations expose Kenvue Inc. to financial, economic, and political risks in various markets, including currency exchange fluctuations, increased compliance costs, and potential nationalization or expropriation of assets.
• Trade Relations: New trade actions, tariffs, sanctions, quotas, or trade barriers could increase supply chain costs, create economic uncertainty, and alter consumer purchasing behavior.
• Acts of war, military actions, terrorist attacks, or civil unrest: Such events could lead to reduced consumer spending, supply chain disruptions, increased costs, foreign currency volatility, and diminished protection for intellectual property.
• Climate Change: Physical risks from natural disasters and extreme weather, impacts on biodiversity, and water scarcity could disrupt operations and increase costs. Legal, regulatory, or market measures to address climate change could also impose significant operating or capital expenditures.
• Sustainability Scrutiny: Increasing scrutiny and evolving stakeholder expectations regarding sustainability practices and performance, including new legal requirements, could lead to additional compliance costs, negative publicity, and impact consumer and investor sentiment.

Innovation & Technology Leadership

Research & Development Focus: Kenvue Inc.'s research and development organization integrates deep, multi-disciplinary scientific expertise with active engagement from healthcare professionals, centering product development on human empathy and consumer insights. A global team of approximately 1,600 scientists, doctors, pharmacists, and engineers collaborates across the product development lifecycle, partnering with consumers, healthcare professionals, and academic institutions to foster a continuous pipeline of meaningful innovation. The company operates a global network of innovation and development hubs. Core Technology Areas: Kenvue Inc. is focused on modern, science-backed innovations that deliver reliable personal care products and technologies to improve well-being. The company is piloting the use of artificial intelligence-based technologies, including generative AI, in supply chain and operations, content creation, and Kenvuer productivity enhancement. Innovation Pipeline: Kenvue Inc. has a continuous pipeline of innovative new products, solutions, and experiences, including connected health offerings such as the Zyrtec AllergyCast app and the Neutrogena Skin360 app. Many of its products have a long history of life-enhancing, first-to-market innovations, and the company has driven innovation and clinical compendium in entire categories.

Intellectual Property Portfolio: Kenvue Inc. relies on a combination of intellectual property rights, including trademarks, trade secrets, patents, and copyrights, as well as rights to third-party intellectual property through licenses. Its brands are critical to success, with the vast majority of Net sales derived from proprietary trademarks and trade names. The company actively files and maintains a global patent portfolio, though no single patent is considered material to the business. Trade secrets, know-how, and other proprietary information are protected through Technology Systems and confidentiality agreements. Licensing Programs: Kenvue Inc. engages in both inbound and outbound third-party licensing arrangements. In connection with the Separation, Johnson & Johnson granted Kenvue Inc. licenses to use certain intellectual property rights, including the "Johnson & Johnson" name and signature and other legacy Johnson & Johnson branding, for varying durations. IP Litigation: Kenvue Inc. is involved in legal proceedings based on alleged violations of intellectual property rights of others.

Technology Partnerships: Kenvue Inc. collaborates with third-party partners for its Technology Systems and digital strategy, including cloud-based service providers and their vendors.

Leadership & Governance

Executive Leadership Team

Leadership Continuity: Kenvue Inc. follows a disciplined, ongoing succession planning process for its senior management and other key executives. Board Composition: The Board of Directors has adopted Principles of Corporate Governance, along with an Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, and Board Committee charters, to provide a framework for its corporate governance practices. The Nominating, Governance & Sustainability Committee assists the Board with risk oversight matters, including privacy and cybersecurity, and receives regular reports from the Chief Information Security Officer and Chief Privacy and Digital Officer.

Human Capital Strategy

Workforce Composition: As of December 28, 2025, Kenvue Inc. had approximately 22,000 employees, with 99% full-time and 1% part-time. The geographic distribution of employees is approximately 23% in North America, 28% in Europe, Middle East, and Africa, 30% in Asia Pacific, and 19% in Latin America. Manufacturing employees constitute 23% of the total workforce. Kenvue Inc. emphasizes a diverse workforce that reflects its global consumer base.

Talent Management: Acquisition & Retention: Kenvue Inc. aims to attract, develop, and retain top talent through competitive compensation, benefits, and well-being programs. Its hiring strategy is designed to be fair, consistent, objective, and merit-based. The company seeks to motivate and reward employees with annual cash incentives and equity-based awards, depending on job level, and periodically benchmarks its compensation programs for competitiveness. Diversity & Development: Kenvue Inc. fosters an inclusive and trusting workplace, supported by Kenvuer Impact Networks (employee resource groups) and mentorship programs. It invests in the learning and development of all employees through various methods, including on-the-job training, special assignments, and e-learning or in-classroom training, to ensure skills remain relevant. Culture & Engagement: The company strives to build a culture of performance that rewards impact, united by its purpose to realize the extraordinary power of everyday care and anchored in core values: putting people first, caring fiercely, earning trust with science, and solving with courage. Regular surveys gauge employee sentiment, and the Kenvue Cares global employee volunteer program connects the workforce to community support.

Environmental & Social Impact

Environmental Commitments: Kenvue Inc.'s sustainability strategy, the "Healthy Lives Mission," includes public targets designed to govern environmental impacts and risks while identifying opportunities for innovation and profitable growth. The company provides more details on its progress in its annual Healthy Lives Mission Report and its climate-related risks and opportunities in its TCFD Report, both available on its website. Supply Chain Sustainability: Kenvue Inc. engages with suppliers on ESG requirements and supplier diversity programs, and focuses on responsible sourcing of materials.

Social Impact Initiatives: Kenvue Inc. supports communities worldwide through strategic investments, including financial contributions, in-kind charitable product donations, and employee volunteerism through the Kenvue Cares program.

Business Cyclicality & Seasonality

Demand Patterns: While seasonality has a limited impact on Kenvue Inc.'s consolidated Net sales, certain product categories experience seasonal fluctuations.

• Seasonal Trends: In the Self Care segment, products like Motrin and Tylenol are typically purchased more frequently during the winter cold and flu season, while Benadryl and Zyrtec see higher demand during spring and fall allergy seasons. In Skin Health and Beauty, sales of SPF-containing products are typically higher in preparation for summer, and moisturizers see increased sales in the fall and winter. Within the Essential Health segment, certain wound care products are purchased more frequently in the summer months.
• Economic Sensitivity: Kenvue Inc.'s operating results are affected by macroeconomic factors such as general economic conditions, inflation, consumer confidence, and employment rates. During periods of economic uncertainty, consumers may reduce discretionary spending or shift to lower-priced private-label or generic products, impacting sales volumes and product mix. Planning & Forecasting: Kenvue Inc. forecasts inventory needs and places orders with third-party manufacturers in advance of firm customer orders to ensure adequate supply.

Regulatory Environment & Compliance

Regulatory Framework: Kenvue Inc. is subject to extensive government regulations in the United States and globally. Industry-Specific Regulations:

• Quality and Safety: Regulated by the U.S. Food and Drug Administration (FDA) and comparable international authorities, requiring facilities and operational procedures to comply with current Good Manufacturing Practices (cGMP). The U.S. Consumer Product Safety Commission (CPSC) regulates consumer products under acts like the Poison Prevention Packaging Act (PPPA).
• Drug Products: Most U.S. over-the-counter (OTC) products are regulated under the FDA's monograph system, while some are approved via the New Drug Application (NDA) process. The U.S. Drug Enforcement Administration (DEA) regulates pseudoephedrine (PSE)-containing products. In the EU, OTC products are subject to pre- and post-marketing regulation by EU and Member State authorities.
• Cosmetics: Regulated by the FDA under the Federal Food, Drug, and Cosmetic Act and the Fair Packaging and Labeling Act. The Modernization of Cosmetics Regulation Act (2022) expanded FDA authority, including mandatory recall and facility registration. Certain cosmetic products are also regulated by the CPSC under the PPPA.
• Medical Devices: Products such as BAND-AID Brand Adhesive Bandages are regulated by the FDA, typically requiring 510(k) clearance. In the EU, medical devices are regulated under the Medical Device Regulation (Regulation (EU) 2017/745).
• Dietary Supplements: Regulated in the U.S. by the Dietary Supplement Health and Education Act of 1994 and in the EU as food products under the Food Supplements Directive 2002/46/EC.
• Labeling and Product Claims: Subject to various laws on labeling and product claims, including the FTC's Endorsement Guides and the Federal Trade Commission Act (FTC Act), as well as state consumer protection laws like California’s Proposition 65.
• Pricing: Activities are subject to price control laws and regulations in some markets, which can become more stringent during uncertain economic conditions.
• Environment, Health, and Safety: Subject to a broad range of environmental, health, and safety laws and regulations enforced by agencies like the U.S. Environmental Protection Agency (EPA) and international authorities. This includes REACH regulations in the EU and emerging Extended Producer Responsibility (EPR) laws.
• Privacy and Data Protection: Subject to complex and evolving privacy and data protection laws globally, including the California Consumer Privacy Act, EU General Data Protection Regulation (GDPR), U.K. GDPR, and China’s Personal Information Protection Law (PIPL).
• Anti-Corruption: Subject to anti-corruption laws such as the U.S. Foreign Corrupt Practices Act (FCPA), the U.K. Bribery Act 2010, and Chinese anti-corruption laws. International Compliance: Kenvue Inc. faces multi-jurisdictional requirements and harmonization challenges in its global operations. Legal Proceedings: Kenvue Inc. is involved in various legal proceedings and governmental investigations. These include product liability claims related to acetaminophen (allegations of association with autism spectrum disorder and attention-deficit/hyperactivity disorder), talc-containing products (outside the U.S. and Canada), phenylephrine (effectiveness as a nasal decongestant), and benzoyl peroxide (degradation into benzene). The company is also subject to general litigation, including environmental cost recovery actions.

Tax Strategy & Considerations

Tax Profile: Kenvue Inc.'s worldwide effective income tax rate was 26.5% for fiscal year 2025, compared to 27.2% in fiscal year 2024 and 24.0% in fiscal year 2023. The fiscal year 2025 rate is higher than the U.S. federal statutory rate primarily due to increases in unrecognized tax benefits from ongoing tax audits and U.S. taxes on foreign inclusions with limited foreign tax credit utilization, partially offset by favorable return-to-provision adjustments and state deferred tax remeasurements. Geographic Tax Planning: Kenvue Inc. conducts business and files tax returns in numerous jurisdictions. It has operations in Singapore under various tax incentives. The company has recorded deferred tax liabilities on all undistributed earnings of its international subsidiaries through fiscal year 2017 and certain earnings thereafter, but not for other indefinitely reinvested foreign earnings, which, if repatriated, would incur an estimated tax effect of approximately $158 million. Tax Reform Impact: Kenvue Inc. has included the impact of enacted legislation related to the Organization for Economic Co-operation and Development’s (OECD) Pillar Two Inclusive Framework (global minimum tax) in its provision for taxes since fiscal year 2024, though the impact of currently enacted laws is not significant. The OECD's Side-by-Side package, announced January 5, 2026, is not expected to materially impact Kenvue Inc.'s effective tax rate. The One Big Beautiful Bill Act (OBBBA), signed July 4, 2025, did not have a material impact on the current fiscal year effective tax rate. Unrecognized Tax Benefits: As of December 28, 2025, Kenvue Inc. had $194 million in unrecognized tax benefits, of which $182 million would affect the annual effective tax rate if recognized.

Insurance & Risk Transfer

Risk Management Framework: Kenvue Inc. manages its exposure to liabilities and losses through various insurance contracts from third-party carriers, subject to deductibles, policy limits, and other terms.

• Insurance Coverage: Kenvue Inc. maintains cybersecurity insurance, but there is no certainty that coverage will be adequate for all incurred liabilities or that it will remain available on favorable terms. Product liability insurance availability and coverage are also uncertain.
• Risk Transfer Mechanisms: Kenvue Inc. utilizes derivative financial instruments, such as forward foreign exchange contracts and cross currency swap contracts, to manage foreign currency and interest rate exposures. It also employs commodity hedging contracts to manage cost exposures on material purchases. Contractual risk allocation mechanisms, such as indemnification agreements with Johnson & Johnson for certain liabilities (e.g., Talc-Related Liabilities), are also in place, though the sufficiency of such indemnities is not assured.