On Monday, Kenvue Inc . (NYSE: NYSE:) experienced an over 4% decline in stock value following a fireside chat at the Morgan Stanley (NYSE:) Global Consumer & Retail Conference held in New York City. The event featured Kenvue’s CEO Thibaut Mongon and CFO Paul Ruh discussing the company’s progress since becoming a public entity and its future strategies.
Mongon highlighted the significant transformation Kenvue has undergone since separating from Johnson & Johnson (NYSE:), shifting from a division focused on cash generation to an independent company aiming for profitable growth. The financial separation from J&J is complete, with J&J fully divesting its stock in May of this year. Kenvue is about 70% through its TSA exit program and expects to complete it by Q2 of the following year. The CEO also mentioned the implementation of the ‘new Kenvue playbook,’ which involves reaching more consumers, unleashing efficiencies, and fostering a culture of performance.
On the topic of category growth versus market share, Mongon pointed out that while some areas like flu incidence are returning to pre-pandemic levels, affecting volume negatively, the company’s brands remain strong, with significant share gains in certain categories. He also emphasized the underpenetration of consumer health categories, presenting opportunities for growth by increasing household penetration and educating consumers.
Ruh addressed the balance between volume and pricing, noting that the company is moving towards a growth algorithm of two-thirds volume and one-third pricing. He explained that while the company has relied on pricing during high inflation, future growth will be more balanced. Ruh also discussed cost-saving opportunities, with a focus on gross margin and operational efficiencies.
The conversation also covered investment in advertising and market-share growth. Mongon confirmed that Kenvue is in an investment phase, with ad spending expected to continue increasing in 2025. He stressed the importance of ROI from advertising and the company’s meticulous tracking of investment efficiency.
Lastly, Ruh outlined Kenvue’s capital allocation priorities, which include investing in the business, maintaining healthy dividends, deleveraging, and potentially enhancing share buyback programs or considering M&A in the future.
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