KVUE · 10-Q · 2026Q2 · Full report

Gross Margin Drivers

Kenvue Inc. · 2026-08-06 · Importance 43 · Surprise 32 · No source text

Six-month cost of sales increased 3.5% to $3.261 billion from $3.151 billion, while gross margin expanded 10 basis points to 58.5% from 58.4%. Supply-chain optimization benefits and favorable value realization more than offset net input-cost inflation, U.S. tariffs, and unfavorable transactional foreign-exchange changes. Quarterly gross margin declined 70 basis points to 58.2% as net input-cost inflation, tariffs, and unfavorable transactional foreign exchange outweighed supply-chain benefits and favorable value realization. The six-month margin improvement indicates that operational savings were more significant than the corresponding cost pressures during the period.

Key facts

• Cost of sales for the fiscal six months ended June 28, 2026: $3,261 million, an increase of $110 million, or 3.5%; gross profit margin expanded 10 basis points to 58.5% from 58.4% source
• Cost of sales for the fiscal three months ended June 28, 2026: $1,654 million, an increase of $76 million, or 4.8%; gross profit margin declined 70 basis points to 58.2% from 58.9% source
• Gross profit margin headwinds included net input cost inflation, tariffs imposed on goods imported into the United States, and unfavorable transactional foreign currency exchange rates, partially offset by supply chain optimization initiatives and favorable value realization source
• The increase in Essential Health Segment adjusted operating income was primarily driven by volume-related Net sales increases and the benefits associated with our supply chain optimization initiatives, partially offset by net input cost inflation, the impact of tariffs imposed on goods imported into the United States, and unfavorable changes in foreign currency exchange rates. source

Impact estimates