By Raghav Mahobe and Ananya Mariam Rajesh
(Reuters) - Kenvue, the former consumer health unit of Johnson & Johnson (NYSE:JNJ), forecast full-year profit above Wall Street estimates on Thursday, betting on resilient demand for its skincare and self-care products such as Neutrogena and Tylenol.
Shares of the company still fell as much as 10% after J&J, which owns 90% of Kenvue's outstanding shares, said a tender offer to sell the stake could start as early as the coming days.
The timing of the tender offer "was earlier than expected" because there was a 180-day lockup following Kenvue's initial public offering (IPO) in May, said Navann Ty, an analyst at BNP Paribas (OTC:BNPQY) Exane. Typically, company insiders cannot sell shares during the IPO lock-up period.
Kenvue, in its first results announcement after going public, forecast annual adjusted profit per share between $1.26 and $1.31, above analysts' expectations of $1.23, according to Refinitiv.
Consumers prioritizing their dollars for essential, daily use products amid a cost-of-living crisis in some parts of the world has boosted sales for companies such as Kenvue and peer Haleon.
"While consumers may be trading down in more discretionary and traditional staple categories, we have not seen this dynamic in our portfolio," CEO Thibaut Mongon said, adding that health and wellness was still in focus.
That helped Kenvue record a 12.2% rise in quarterly revenue for the self-care business, which houses over-the-counter products. The segment also benefited from a rise in cough, cold and flu cases globally.
Suncreens, especially under the Neutrogena range, were doing "extremely well" in the summer season, Mongon said.
Kenvue's quarterly net sales rose 5.4% to $4.01 billion.
However, adjusted gross profit margin fell to 57.5% from 59.3% last year, dragged by a strong dollar and higher labor and raw material costs.