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KVUE segment-level adjusted OI). Categories represented in SHB primarily include
face and body care, hair care, and sun care, and key brands include Neutrogena, Aveeno,
OGX, Dr.Ci:Labo, Le Petit Marseillais, Lubriderm, Rogaine, Dabao, and Clean & Clear.
Figure 17: Skin Health & Beauty 29% of Revenues and 18% of Segment
OI
29% 18%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
% of FY22 Sales % of FY22 Segment OI
Source: Company reports.
Figure 18: Skin Health & Beauty Category Revenue Mix
% of FY Sales
74.6% 68.7%
25.4% 31.3%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
2019 2022
FACE AND BODY CARE HAIR, SUN AND OTHER
Source: Company reports.
Flat OSG Performance in Last 3 Years Ending 2023, Due to Supply Chain
Constraints...
Despite the category growing at a +4.5% CAGR from 2019-2022, KVUE􀋖s SHB
segment has underperformed (3Y CAGR through 2022 just +0.1%) as the business
suffered through supply chain challenges that seemed to have a greater impact relative
to competitors, partially attributable to KVUE􀋖s exposure to sun care, which went
through challenges last year given silicone shortages, in addition to impacts from lost
usage occasions during the COVID pandemic (also impacted competitors). With that,
over the past three years SHB essentially contributed nothing to KVUE􀋖s organic
growth, and as of 2022, SHB volumes still stood around 3% below 2019 levels.
… Turning the Corner Accelerating to MSDs OSG in 2H22 and Low Teens in 1Q23
That said, KVUE appears to be turning a corner more recently in top-line trajectory
(albeit against a low bar) as the company undertook actions to streamline its supply
chain and build resilience (in addition to general easing of supply chain situation
globally). Specifically, 2H22 organic growth in the segment came in at +5.3% (+MSD%
in each of 3Q/4Q) vs. a -4.0% organic growth decline in 1H22, implying a 3Y CAGR in
2H22 of +1.5% vs. -0.8% in 1H22. Momentum has continued thus far in 1Q23 with
organic growth of +13.2%, and the segment seems to be on stronger footing now to take
advantage of favorable secular trends in the categories of body, face, and sun care.
This document is being provided for the exclusive use of DAVID WANG at MARLOWE PARTNERS LP.
15
Andrea Teixeira, CFA AC
(1-212) 622-6735
andrea.f.teixeira@jpmorgan.com
North America Equity Research
29 May 2023 J P M O R G A N
Figure 19: Skin Health & Beauty Organic Growth Trends and Outlook
-3.3%
2.3%
-2.3% -2.1%
2.5%
3.5%
0.8%
0.6%
2.8%
7.9% 2.6%
1.8%
-4%
-2%
0%
2%
4%
6%
8%
10%
2020 2021 2022 2023E 2024E 2025E
Volume Price/Mix
Source: Company reports and J.P. Morgan estimates.
Figure 20: Skin Health & Beauty 2022/2023E Organic Growth by Halves
-5.6%
1.1% 1.0%
-5.1%
1.6%
4.1%
8.4%
7.4%
-8%
-6%
-4%
-2%
0%
2%
4%