Kenvue Reports Third Quarter 2025 Results

•Net Sales (3.5)%; Organic Sales1 (4.4)%

•Diluted EPS was $0.21; Adjusted Diluted EPS1 was $0.28

•Affirms Outlook for FY’25

•Kirk Perry Named Permanent Chief Executive Officer and Company Announced Additional Key Leadership Appointments

SUMMIT, N.J. November 3, 2025 – Kenvue Inc. (NYSE: KVUE) today announced financial results for the third quarter ended September 28, 2025.

“Throughout the third quarter, our team remained focused on our four operating priorities to drive improved performance,” said Kirk Perry, Chief Executive Officer. “Third quarter results keep us on track to deliver our full year guidance and we are confident in the decisive actions we are taking to accelerate Kenvue’s performance and unlock the inherent value of our brands.”

•Net sales decreased 3.5% vs the prior year period, primarily reflecting Organic sales1 decline of 4.4%, partially offset by foreign currency benefit of 1.0%.

•Gross profit margin was 59.1% vs 58.5% in the prior year period. Adjusted gross profit margin1 was 61.2% vs 60.7% in the prior year period.

•Operating income margin was 16.7% vs 16.8% in the prior year period. Adjusted operating income margin1 was 21.5% vs 22.1% in the prior year period.

•Diluted earnings per share were $0.21 vs $0.20 in the prior year period. Adjusted diluted earnings per share1 were $0.28 both in the current and prior year periods.

•The Company is affirming its outlook for Full Year 2025.

Third quarter 2025 Net sales decreased 3.5% vs the prior year period, primarily reflecting Organic sales decline of 4.4%, partially offset by foreign currency benefit of 1.0%. Organic sales decline was driven by a 4.0% volume decrease and unfavorable value realization of 0.4%, reflecting planned strategic price investments. Similarly to the second quarter 2025, volumes in the third quarter 2025 were impacted by changes in shipment timing versus last year in China, trade inventory reductions in certain customers, and sequential deceleration in the global weighted category growth rate, reflecting low seasonal incidences impacting Self Care.

Third quarter 2025 Gross profit margin expanded 60 basis points to 59.1% from 58.5% in the prior year period. Adjusted gross profit margin expanded 50 basis points to 61.2% from 60.7% in the prior year period. The year-over-year change in both measures reflects the savings from productivity gains attributable to our global supply chain optimization initiatives, which helped offset the impact from lower volume, inflationary, tariff, and foreign exchange headwinds, as well as strategic price investment.

Third quarter 2025 Operating income margin was 16.7% vs 16.8% in the prior year period. Third quarter 2025 Adjusted operating income margin was 21.5% vs 22.1% in the prior year period. The year-over-year change in both measures reflects the year-over-year improvement in Gross profit margin and Adjusted gross profit margin, savings from Our Vue Forward, as well as a year-over-year increase in brand support.

Third quarter 2025 Interest expense, net was $93 million vs $96 million in the prior year period.

Third quarter Effective tax rate was 24.3% vs 33.6% in the prior year period. The Adjusted effective tax rate1 was 24.0% vs 28.9% in the prior year period. The year-over-year reduction in both measures largely reflects an increase in discrete tax benefits and unfavorable tax return true-ups in the third quarter 2024.

Third quarter 2025 Diluted earnings per share were $0.21 vs $0.20 in the prior year period and Adjusted diluted earnings per share were $0.28 both in the current and prior year periods.

The Company is affirming its outlook for Full Year 2025 as follows:

•Net sales and Organic sales are expected to be down low-single-digits, assuming approximately neutral impact from foreign currency translation.

•Adjusted operating income margin is expected to decline year-over-year.

•Adjusted diluted earnings per share are expected to be in the range of $1.00 to $1.05, including a low-single-digit unfavorable impact from foreign currency.

The outlook is predicated on the current foreign exchange rates and the estimated impact from tariffs in place as of October 31, 2025.

Kenvue is not able to provide the most directly comparable GAAP measures or reconcile Adjusted operating income margin or Adjusted diluted earnings per share to comparable GAAP measures on a forward-looking basis without unreasonable efforts given the unpredictability of the timing and amounts of discrete items such as foreign exchange, acquisitions or divestitures, which may significantly impact GAAP results.

The Company announced today that the Board of Directors has named Kirk Perry as Chief Executive Officer on a permanent basis, effective immediately. Mr. Perry, who had served as Interim Chief Executive Officer since July 14, 2025, will also continue to serve as a non-independent member of the Board of Directors.

The Company has appointed Carlos De Jesus as Group President, North America, effective November 3, 2025. Mr. De Jesus has spent more than 25 years in the global consumer products industry, with a proven track record of driving growth for billion-dollar brands and leading large-scale turnarounds across global markets. Mr. De Jesus held various leadership roles at Procter & Gamble, most recently serving as Senior Vice President, Amazon Global Team Leader & North America Digital Commerce. He oversaw well-known brands such as Pampers, Gillette, Duracell, Crest, and most recently, Oral-B. He succeeds Jan Meurer, who will depart the Company following a transition period.

The Company also announced that it will appoint Jonathan Halvorson to a newly created role of Chief Digital and Marketing Officer, effective November 17, 2025. Mr. Halvorson is a seasoned and strategic marketing leader with deep expertise in digital transformation, consumer experience, and commerce strategy. He most recently served as Senior Vice President of Consumer Experience and Digital Commerce at Mondelēz International, where he led global teams driving the future of digital marketing, AI adoption, and data-driven consumer engagement across iconic brands such as Cadbury, Oreo, Ritz, and Chips Ahoy.

The role of Chief Growth Officer will be eliminated, and Charmaine England will leave the Company following a transition period.

In a separate release issued today, Kenvue announced it has entered into a definitive merger agreement under which Kimberly-Clark will acquire all of the outstanding shares of Kenvue common stock in a cash and stock transaction.

As a result, Kenvue will no longer host its previously planned quarterly conference call with investors. The Company has posted prepared remarks regarding its third quarter 2025 earnings results on its website at investors.kenvue.com.

Kenvue Inc. is the world’s largest pure-play consumer health company by revenue. Built on more than a century of heritage, our iconic brands, including Aveeno®, BAND-AID® Brand, Johnson’s®, Listerine®, Neutrogena®, and Tylenol®, are science-backed and recommended by healthcare professionals around the world. At Kenvue, we realize the extraordinary power of everyday care. Our teams work every day to put that power in consumers’ hands and earn a place in their hearts and homes. Learn more at kenvue.com.

1Non-GAAP Financial Measures

Below are definitions and the reconciliation to the most closely related GAAP measures for the non-GAAP measures used in this press release.

Adjusted EBITDA margin: We define EBITDA as U.S. GAAP Net income adjusted for interest, provision for taxes, and depreciation and amortization. We define Adjusted EBITDA as EBITDA adjusted for restructuring expenses and operating model optimization initiatives, costs incurred in connection with our establishment as a standalone public company (“Separation-related costs”), conversion of stock-based awards, stock-based awards granted to individuals employed by Kenvue as of October 2, 2023 (“Founder Shares”), impairment charges, the impact of the deferred transfer of certain assets and liabilities from Johnson & Johnson in certain jurisdictions (the “Deferred Markets”), litigation income, losses on investments, and tax indemnification releases. We define Adjusted EBITDA margin as Adjusted EBITDA as a percentage of U.S. GAAP Net sales. Management believes this non-GAAP measure is useful to investors as it provides a supplemental perspective to the Company’s operating efficiency over time.

Organic sales: We define Organic sales as U.S. GAAP Net sales excluding the impact of changes in foreign currency exchange rates and the impact of acquisitions and divestitures. We report changes in Organic sales on a period-over-period basis. Management believes reporting period-over-period changes in Organic sales provides investors with additional, supplemental information that is useful in assessing the Company’s results of operations by excluding the impact of certain items that we believe do not directly reflect our underlying operations.

This press release contains “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements about management’s expectations of Kenvue’s future operating and financial performance, product development, market position, and business strategy. Such forward-looking statements include statements regarding the proposed transaction with Kimberly-Clark. Forward-looking statements may be identified by the use of words such as “plans,” “expects,” “will,” “anticipates,” “estimates,” and other words of similar meaning. The reader is cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of Kenvue and its affiliates. Risks and uncertainties include, but are not limited to: the inability to execute on Kenvue’s business development strategy; inflation and other economic factors, such as interest rate and currency exchange rate fluctuations, as well as existing or proposed tariffs and other constraints on trade both in the U.S. and in foreign markets; the ability to successfully manage local, regional, or global economic volatility, including reduced market growth rates, and to generate sufficient income and cash flow to allow Kenvue to effect any expected share repurchases and dividend payments; Kenvue’s ability to maintain satisfactory credit ratings and access capital markets, which could adversely affect its liquidity, capital position, and borrowing costs; competition, including technological advances, new products, and intellectual property attained by competitors; challenges inherent in new product research and development; uncertainty of commercial success for new and existing products and digital capabilities; challenges to intellectual property protections including counterfeiting; the ability of Kenvue to successfully execute strategic plans, including Our Vue Forward and other restructuring or cost-saving initiatives; the impact of business combinations and divestitures, including any ongoing or future transactions; manufacturing difficulties or delays, internally or within the supply chain; product efficacy or safety concerns resulting in product recalls or regulatory action; significant adverse litigation or government action, including related to product liability claims; changes to applicable laws and regulations and other requirements imposed by stakeholders; changes in behavior and spending patterns of consumers; natural disasters, acts of war, or terrorism, catastrophes, or epidemics, pandemics, or other disease outbreaks; financial instability of international economies and legal systems and sovereign risk; the inability to realize the benefits of the separation from Kenvue’s former parent, Johnson & Johnson; the risk of disruption or unanticipated costs in connection with the separation; the Company’s inability to consummate the proposed transaction with Kimberly-Clark due to, among other things, market, regulatory and other factors; the potential for disruption to the Company’s business resulting from the proposed transaction with Kimberly-Clark; and potential adverse effects on the Company’s stock price from the announcement, suspension or consummation of the proposed transaction with Kimberly-Clark.

A further list and descriptions of these risks, uncertainties, and other factors can be found in Kenvue’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other filings, available at investors.kenvue.com or on request from Kenvue. Any forward-looking statement made in this release speaks only as of the date of this release. Kenvue undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or developments or otherwise.

Sofya Tsinis

Kenvue_IR@kenvue.com

Melissa Witt

media@kenvue.com

(1) Price/Mix reflects value realization.

(1) Depreciation consists of depreciation of property, plant, and equipment and amortization of integration and development costs capitalized in connection with cloud computing arrangements.

(2) Relates to the amortization of definite-lived intangible assets (primarily trademarks, trade names, and customer lists) over their estimated useful lives.

(3) Separation-related costs relate to non-recurring costs incurred in connection with our establishment of Kenvue as a standalone public company. Separation-related costs associated with information technology and other activities, primarily related to the disentanglement of systems and the discontinuance of certain information technology assets, are substantially completed. However, costs related to legal entity name changes and certain other separation-related activities are expected to continue for a longer period than originally anticipated. Separation-related costs are composed of the following:

(4) Restructuring expenses and operating model optimization initiatives, which relate to the 2024 Multi-Year Restructuring Initiative, are composed of the following:

(5) Impairment charges includes $488 million recognized in the fiscal three months ended June 30, 2024 in relation to Dr.Ci:Labo® long-lived assets, $68 million recognized in the fiscal three months ended March 31, 2024 on the held for sale asset associated with the Company’s former corporate headquarters in Skillman, New Jersey, and $22 million recognized in the fiscal three months ended June 30, 2024 on certain software development assets.

(1) Relates to the amortization of definite-lived intangible assets (primarily trademarks, trade names, and customer lists) over their estimated useful lives.

(2) Restructuring expenses and operating model optimization initiatives, which relate to the 2024 Multi-Year Restructuring Initiative, are composed of the following:

(3) Separation-related costs relate to non-recurring costs incurred in connection with our establishment of Kenvue as a standalone public company. Separation-related costs associated with information technology and other activities, primarily related to the disentanglement of systems and the discontinuance of certain information technology assets, are substantially completed. However, costs related to legal entity name changes and certain other separation-related activities are expected to continue for a longer period than originally anticipated. Separation-related costs, including the impact of the conversion of stock-based compensation awards and the incremental stock-based compensation from the issuance of the Founder Shares, are composed of the following:

(4) Impairment charges includes $488 million recognized in the fiscal three months ended June 30, 2024 in relation to Dr.Ci:Labo® long-lived assets, $68 million recognized in the fiscal three months ended March 31, 2024 on the held for sale asset associated with the Company’s former corporate headquarters in Skillman, New Jersey, and $22 million recognized in the fiscal three months ended June 30, 2024 on certain software development assets.

(5) Relates to impairment charges incurred to write off a portion of the Company’s equity investment balance.

The following table presents the Company’s Net sales by geographic region for the periods presented:

The following table presents the Company’s Research and development expenses for the periods presented. Research and development expenses are included within Selling, general, and administrative expenses.

The following table presents the Company’s Cash and cash equivalents, Total debt, and Net debt balance as of the periods presented:

Please refer to the following prepared remarks in conjunction with our third quarter 2025 earnings press release, which can be found under the Investor Relations section of our website at investors.kenvue.com.

Throughout the third quarter, Kenvue’s Board of Directors and leadership team have been hard at work to put the Company on the right path towards accelerated growth by executing against our four operating priorities – leadership and capabilities, operating strategy, operating model & structure, and execution. Our leadership team has identified what we are doing well and what we need to change to win with consumers and operate with greater impact and agility. At the same time, the Board continued to advance a comprehensive review of strategic alternatives for Kenvue, evaluating a broad range of options, which has culminated in today’s announcement of our agreement to combine with Kimberly-Clark.

I am pleased to report that the Board has appointed me as the permanent Chief Executive Officer of Kenvue, effective immediately. I look forward to the continued partnership with the Board and Leadership team on executing on our strategic and financial goals.

We have focused on strengthening our Leadership team and bringing in new talent and capabilities and are pleased to share two critical leadership hires we made: Carlos De Jesus has been appointed as Group President, North America, effective today, and Jonathan Halvorson has been named to the newly created role of Chief Digital & Marketing Officer, effective November 17.

Carlos has over 25 years of experience in the global consumer products industry, most recently serving as Senior Vice President, Amazon Global Team Leader & North America Digital Commerce at Procter & Gamble. He has a proven track record of leading large-scale turnarounds across global markets and driving growth for billion-dollar brands, such as Pampers, Gillette, Duracell, Crest, and most recently, Oral-B.

Jon is a seasoned and strategic marketing leader with deep expertise in digital transformation, consumer experience, and commerce strategy. He most recently served as Senior Vice President of Consumer Experience and Digital Commerce at Mondelēz International, where he led global teams driving the future of digital marketing, AI adoption, and data-driven consumer engagement across iconic brands such as Cadbury, Oreo, Ritz, and Chips Ahoy.

I have worked with both Carlos and Jon in different capacities and have seen the transformative impact they both make in driving growth. With these two new hires, approximately half of our leadership team has been appointed in the last six months, and we are all highly focused on execution and performance.

Carlos succeeds Jan Meurer, who will leave the Company following a transition period. With the creation of the Chief Digital & Marketing Officer role, our Chief Growth Officer role is being eliminated, and Charmaine England will also depart the Company after a transition period.

During the third quarter we continued to navigate through a dynamic external environment, as consumers remained cautious. While the Company’s topline performance was impacted by similar dynamics that we experienced in the second quarter, and our global weighted category slowed sequentially, our team did an excellent job driving strong productivity and effectively managing costs. The combination of third quarter results and quarter-to-date performance in Q4 gives us confidence to reaffirm our outlook for 2025.

During the third quarter, Net sales decreased 3.5% year-over-year, as a 4.4% decline in Organic sales1 was partially offset by a 1.0% benefit from foreign exchange. Importantly, global consumption continued to exceed Organic sales results across each segment. Both value realization and volumes were below year-ago levels in Q3, contracting 0.4% and 4.0%, respectively.

Major drivers of quarterly performance in Q3 include:

1)First, global weighted category growth rate and our consumption slowed sequentially, as both were unfavorably impacted by low seasonal incidences across our largest regions, which weighed on performance of the Self Care business;

2)Second, similarly to the second quarter, trade inventory reductions at some domestic customers, along with year-over-year changes in shipment timing in China weighed on top line; and

3)Third, value realization was unfavorably impacted by planned strategic investments in price in the U.S., which should be largely behind us as we enter the fourth quarter.

In Self Care, Net sales decreased 3.8% year-over-year, as a 5.3% decline in Organic sales was partially offset by a 1.5% benefit from foreign exchange. The weakness in the category was further exacerbated by the impact of unfavorable retailer inventory and year-over-year shipment dynamics both in the U.S. and Asia Pacific, which weighed on our volumes.

During the third quarter, we saw deceleration in the global category, which declined in the low-single-digits year-over-year both in value and units, largely due to the contraction in the seasonal businesses, offsetting continued growth in Smoking Cessation.

For perspective, in the U.S. and China, our two biggest markets for Allergy, the category was down mid-single digits during the quarter, as lower seasonal incidences hindered consumption. Q3 incidences in the U.S. were pacing to the lowest season in the past eight years.

In the U.S., a mid-teens drop in pediatric fever incidences, which represented the lowest level in five years, along with a similar decline in the cough, cold and flu incidences, drove the slowdown in the Pain and Cough, Cold and Flu categories.

Notwithstanding the seasonal dynamics, we continued to win in the market, with our global consumption outpacing both the category and Net sales performance.

In the U.S., Tylenol®, Zyrtec®, Motrin®, and Pepcid® all grew household penetration during the quarter. In Allergy, Zyrtec® was once again the fastest growing brand in the category, gaining market share and strengthening its #1 market position, now held for 17 consecutive quarters on the Adult side, as recent innovations such as Zyrtec® 5mg and Zyrtec® Hives attract new users to the category. We held or gained share in over 80% of the U.S. Self Care business.

Outside the U.S., we are also seeing strong market share momentum – as brands such as Calpol® in the UK, Rhinocort® in China, and Nicorette® are continuing to strengthen their market share.

Share momentum for Nicorette® is fueled by strong innovation both in the product and claim forms, including approval of the entire Nicorette® product range for indication against vaping in the UK earlier this year.

We recently launched Total Quit campaign to champion a world in which people can be free from tobacco and nicotine addiction.

While seasonal and inventory dynamics are weighing on top line performance in Self Care, the underlying health of the business remains strong.

Commentary Regarding Tylenol®

Given the significant misinformation that has been out there surrounding acetaminophen, we would like to provide additional information on this important topic.

We stand with science:

–Rigorous, independent research endorsed by leading medical professionals and global health regulators confirms there is no credible data that shows a proven link between taking acetaminophen and autism.

–We have continuously evaluated the relevant science, and over the last several weeks we have seen a groundswell of leading medical professional organizations and global health regulators, such as the American Academy of Pediatrics, American College of Obstetricians and Gynecologists, Society for Maternal-Fetal Medicine, and World Health Organization – groups that have independently reviewed the science regarding acetaminophen use in pregnancy and neurodevelopmental disorders – vocalize that causation has not been established.

–These scientifically unsound statements have perpetuated misinformation on the safety of one of the most studied medications in history and create a real risk to the health and safety of pregnant women and children. High fevers and pain are widely recognized as potential risks to a pregnancy if left untreated. And suggesting women suffer through conditions like fevers could be potentially harmful to both mom and baby and can even drive mothers to riskier alternatives.

–We will continue to underscore how critical it is that expecting mothers understand that health professionals are best positioned to advise them on whether taking acetaminophen is appropriate based on their unique medical conditions, as indicated on our product label for Tylenol®.

–We have also made our position on this matter available on our website at https://www.kenvue.com/media/statements-on-acetaminophen

With generations of use and ongoing vocal support from leading medical voices all around the world, we have seen measured brand trust in Tylenol® remain at the same level as early September.

–Tylenol® remains the #1 Doctor and #1 Pediatrician recommended brand of pain reliever.

–As of Q3, adult Tylenol® has gained share for 13 consecutive quarters in the U.S. Pain category, strengthening its #1 market leadership and continuing to grow its share gap versus competitors.

–Kenvue also grew share in Pediatric Pain during the quarter and the latest weeks in October.

The total U.S. Children’s Tylenol® business accounts for approximately 1% of the Company’s Net sales.

When looking at scanner data for both adult and pediatric pain categories, it’s important to keep in mind both the level of seasonal incidences, which have been very low thus far, as well as base period comparisons. Specifically, in recent weeks we have been lapping pediatric ibuprofen supply constraints as well as adult acetaminophen private label out of stocks.

Our #1 priority is to the consumers and healthcare professionals we serve every day.

We remain committed to providing clarity to our consumers during this time of confusion, as well as continuing to deliver educational tools to pediatricians, doctors, and pharmacists to help them provide information on the safe use of acetaminophen for their patients.

Our message continues to be focused on our #1 Healthcare Professional recommendation, safety backed by decades of rigorous and credible research, and a reminder for consumers to read the label and to talk to their doctor if they are pregnant or breastfeeding.

In Skin Health and Beauty, Net sales decreased 3.2% versus last year due to a 3.5% decline in Organic sales, a 0.6% benefit from foreign exchange, and a 0.3% headwind from the prior year divestiture. Value realization and volume were down 1.3% and 2.2% respectively. Net sales and Organic sales growth in EMEA and Latin America was more than offset by declines in Asia Pacific and North America.

Global consumption was relatively stable, as Net sales were impacted by customer inventory movements and order patterns, similar to Self-Care. Global consumption for Neutrogena®, our largest brand, continued to improve sequentially and inched into a positive territory for the first time since Q4 2023 driven by acceleration in the U.S. Skin Health and Beauty continued to perform well in EMEA driven primarily by strength in Neutrogena®, Aveeno®, and OGX®.

Net sales declined year-over-year in the U.S. at a lower rate than Q2, and what is particularly encouraging, is the sequential improvement in value and unit consumption for the segment, as well as Neutrogena®, which grew in units year-over-year for the second consecutive quarter. In addition, we have also been able to stabilize our total distribution points across several major brands, including Neutrogena® and OGX® after many years of decline, which we believe demonstrates renewed retailer confidence in the potential of our brands and the improved innovation pipeline, which is helping us secure incremental shelf space.

We are continuing our work to get the U.S. business back on a sustainable growth and share gain trajectory with a particular focus on accelerating e-commerce, innovation, and brand building. With the shift to eCommerce most prominent in the Skin Health and Beauty category, particularly in Face, winning online is critical to our ability to stem market share loss for Neutrogena®. Over the past few months, we have put corrective action plans in place, with encouraging results during the October Prime Day, when Neutrogena® gained share in Face for the first time in 2 years. We are taking these learnings and reapplying across the rest of the portfolio and outside of promotional events.

Net sales for Essential Health decreased 3.3%, as a 4.2% decline in Organic sales was partially offset by a 0.9% benefit from foreign exchange. While consumption improved sequentially relative to Q2, Net sales were negatively impacted by inventory dynamics in North America and Asia Pacific, which weighed on volumes.

BAND-AID® brand was a major source of strength in the quarter due to strong innovation launches this year, including Waterproof and Tie Die products. Our Women’s Health segment continued to grow consumption despite competitive pressure in Asia Pacific region that we are addressing via innovation.

Our performance in Oral Care continued to lag the category, particularly in North America, and we continue to focus our actions on stabilizing the core and retaining base users while unlocking mild/alcohol-free segment through innovation. We are seeing signs of improvement in consumer offtake as we implement targeted interventions at select customers and continue the global roll out of our successful ‘Wash Your MouthTM’ campaign across major markets.

This campaign is driving stronger brand awareness in markets such as the U.S., Brazil, Thailand, and Japan. We have also stepped up our efforts to engage with Health Care Professionals and have seen an increase in average weekly recommendations in the U.S. for Listerine®, with the brand further solidifying its #1 Dentist & Hygienist Recommended position. As we double down on our efforts to improve household penetration, we are targeting new usage occasions beyond the home as well and are in the process of rolling out the new Listerine® on-the-go sachet format across markets.

We are continuing to make progress in our Baby brands with consumption improving sequentially for Aveeno® Baby and Johnson’s® Baby. Aveeno® Baby grew consumption and share both globally and, in the U.S., fueled by strength of the Aveeno® Kids portfolio. Johnson’s® Baby continued to see strong share growth momentum in Brazil from innovation and strong in-store activation. We will continue to support the turnaround of Johnson’s® Baby with the global relaunch and new Pure Love For Precious Moments campaign which are live in India and Brazil in Q4.

You will have also seen that proceedings were issued in the UK related to our former talc-based Johnson’s® Baby powder offering. Our statement on this topic is available at https://www.kenvue.com/media/statement-on-behalf-of-kenvue-uk-limited-on-uk-talc-litigation.

Our Gross margin and Adjusted gross margin1 expanded 60 and 50 basis points versus last year, respectively, as we drove strong productivity savings in the quarter across our supply chain, which helped to more than offset the impact from lower volumes, inflation, tariffs, currency, and strategic price investment.

We maintained strong cost discipline in the quarter and continued to realize savings from Our Vue Forward. At the same time, we stayed true to our commitment to increase brand support year-over-year, which went up both in dollars and as a percentage of sales. This resulted in Operating margin and Adjusted operating margin1 contraction of 10 basis points and 60 basis points versus last year, respectively.

We delivered Net income and Adjusted net income1 of $398 million and $538 million in Q3, respectively. Net interest expense declined by $3 million year-over-year to $93 million. Third quarter Effective tax rate was 24.3% while the Adjusted effective tax rate1 came down to 24.0%. The year-over-year reduction in both measures largely reflects an increase in discrete tax benefits and unfavorable tax return true-ups in the third quarter 2024.

Third quarter Diluted earnings per share was $0.21 vs $0.20 in the prior year period. Adjusted diluted earnings per share1 was $0.28, flat year-over-year.

Year-to-date through the third quarter, we generated Net cash flows from operating activities of $1.3 billion as compared to $1.0 billion in the prior year period, as Free cash flow1 improved to nearly $1.0 billion from $0.7 billion in the prior year period. We are moving toward more normalized levels of working capital relative to last year. While still early days, we are also beginning to realize benefits from our effort to improve working capital, such as increasing supplier payment terms closer to industry norms. While timing of new product and seasonal builds impact inventory, we remain focused on optimizing our inventory levels over the long-term.

Q3 results, in combination with our performance over the past month, give us confidence to affirm our outlook for 2025.

–We continue to expect both Net sales and Organic sales to decline low single digits for the year, with approximately neutral impact from foreign exchange. For Q4, we are looking for stronger year-over-year performance in Net sales and Organic sales relative to the year-to-date results, given the robust innovation pipeline, along with an easier base period comparison, which included elevated trade accruals and disruption in China.

–Our expectation for a year-over-year contraction in Adjusted operating margin also remains unchanged, as we continue to plan for higher brand spend in 2025 behind a stronger innovation cadence and overall support for our iconic brands.

–Below the line, we continue to expect Net interest expense to be flat year-over-year, with an Adjusted effective tax rate of 25.5-26.5%.

–We are maintaining our full year Adjusted diluted earnings per share in the range of $1.00 to $1.05, which continues to assume a low-single-digit headwind from foreign exchange.

We are not able to provide the most directly comparable GAAP measures or reconcile Adjusted operating income margin or Adjusted diluted earnings per share to comparable GAAP measures on a forward-looking basis without unreasonable efforts given the unpredictability of the timing and amounts of discrete items such as foreign exchange, acquisitions or divestitures, which may significantly impact GAAP results.

To conclude, the Board and the management team are focused on continuing to take necessary actions to accelerate our path to profitable and sustainable growth.

1Non-GAAP Financial Measures

Below are definitions and the reconciliation to the most closely related GAAP measures for the non-GAAP measures used in these remarks.

Organic sales: We define Organic sales as U.S. GAAP Net sales excluding the impact of changes in foreign currency exchange rates and the impact of acquisitions and divestitures. We report changes in Organic sales on a period-over-period basis. Management believes reporting period-over-period changes in Organic sales provides investors with additional, supplemental information that is useful in assessing the Company’s results of operations by excluding the impact of certain items that we believe do not directly reflect our underlying operations.

These prepared remarks include “forward-looking statements” as defined in the Private Securities Litigation Reform Act of 1995 regarding, among other things, statements about management’s expectations of Kenvue’s future operating and financial performance, product development, market position, and business strategy. Such forward-looking statements include statements regarding the proposed transaction with Kimberly-Clark.

Forward-looking statements may be identified by the use of words such as “plans,” “expects,” “will,” “anticipates,” “estimates,” and other words of similar meaning. The reader is cautioned not to rely on these forward-looking statements. These statements are based on current expectations of future events. If underlying assumptions prove inaccurate or known or unknown risks or uncertainties materialize, actual results could vary materially from the expectations and projections of Kenvue and its affiliates. Risks and uncertainties include, but are not limited to: the inability to execute on Kenvue’s business development strategy; inflation and other economic factors, such as interest rate and currency exchange rate fluctuations, as well as existing or proposed tariffs and other constraints on trade both in the U.S.

and in foreign markets; the ability to successfully manage local, regional, or global economic volatility, including reduced market growth rates, and to generate sufficient income and cash flow to allow Kenvue to effect any expected share repurchases and dividend payments; Kenvue’s ability to maintain satisfactory credit ratings and access capital markets, which could adversely affect its liquidity, capital position, and borrowing costs; competition, including technological advances, new products, and intellectual property attained by competitors; challenges inherent in new product research and development; uncertainty of commercial success for new and existing products and digital capabilities; challenges to intellectual property protections including counterfeiting; the ability of Kenvue to successfully execute strategic plans, including Our Vue Forward and other restructuring or cost-saving initiatives; the impact of business combinations and divestitures, including any ongoing or future transactions; manufacturing difficulties or delays, internally or within the supply chain; product efficacy or safety concerns resulting in product recalls or regulatory action; significant adverse litigation or government action, including related to product liability claims; changes to applicable laws and regulations and other requirements imposed by stakeholders; changes in behavior and spending patterns of consumers; natural disasters, acts of war, or terrorism, catastrophes, or epidemics, pandemics, or other disease outbreaks; financial instability of international economies and legal systems and sovereign risk; the inability to realize the benefits of the separation from Kenvue’s former parent, Johnson & Johnson; the risk of disruption or unanticipated costs in connection with the separation; the Company’s inability to consummate the proposed transaction with Kimberly-Clark due to, among other things, market, regulatory and other factors; the potential for disruption to the Company’s business resulting from the proposed transaction with Kimberly-Clark; and potential adverse effects on the Company’s stock price from the announcement, suspension or consummation of the proposed transaction with Kimberly-Clark.

A further list and descriptions of these risks, uncertainties, and other factors can be found in Kenvue’s filings with the Securities and Exchange Commission, including its most recent Annual Report on Form 10-K and subsequent Quarterly Reports on Form 10-Q and other filings, available at investors.kenvue.com or on request from Kenvue. Any forward-looking statement made in these prepared remarks speaks only as of the date of these prepared remarks. Kenvue undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events, or developments or otherwise.

(1) Price/Mix reflects value realization.

(1) Depreciation consists of depreciation of property, plant, and equipment and amortization of integration and development costs capitalized in connection with cloud computing arrangements.

(2) Relates to the amortization of definite-lived intangible assets (primarily trademarks, trade names, and customer lists) over their estimated useful lives.

(3) Separation-related costs relate to non-recurring costs incurred in connection with our establishment of Kenvue as a standalone public company. Separation-related costs associated with information technology and other activities, primarily related to the disentanglement of systems and the discontinuance of certain information technology assets, are substantially completed. However, costs related to legal entity name changes and certain other separation-related activities are expected to continue for a longer period than originally anticipated. Separation-related costs are composed of the following:

(4) Restructuring expenses and operating model optimization initiatives, which relate to the 2024 Multi-Year Restructuring Initiative, are composed of the following:

(5) Impairment charges includes $488 million recognized in the fiscal three months ended June 30, 2024 in relation to Dr.Ci:Labo® long-lived assets, $68 million recognized in the fiscal three months ended March 31, 2024 on the held for sale asset associated with the Company’s former corporate headquarters in Skillman, New Jersey, and $22 million recognized in the fiscal three months ended June 30, 2024 on certain software development assets.