What Next for Kenvue’s Beauty Brands?

Some of America’s biggest beauty brands have a new owner — and an uncertain future.

On Monday, consumer goods giant Kimberly-Clark announced it would acquire Kenvue, the parent company of painkiller brand Tylenol, as well as beauty brands like Neutrogena, Ogx and Aveeno, for $48.7 billion.

The acquisition came three rocky years after Kenvue spun off from Johnson & Johnson. Since then, its share price lagged its peers, with activist investors singling out its beauty unit as an underperformer. In September, the company was rocked by claims from US President Donald Trump and health secretary Robert F. Kennedy Jr. that Tylenol could be linked to autism. (RFK Jr. has since said there is not enough evidence to prove a link; the company is disputing the claim.)

For Kenvue’s healthcare brands like Listerine, Benadryl and Band-Aid, Kimberly-Clark, which makes the likes of Huggies diapers, is a natural fit. In a presentation shown on Monday, Kimberly-Clark said the acquisition would transform it into a “global health and wellness leader” and that it can scale Kenvue in countries like China, Mexico, South Korea and Indonesia.

Less clear is how Neutrogena and the other beauty brands fit into the combined company. Irving, Texas-based Kimberly-Clark does not have a beauty division or much experience in the category.

And Kenvue’s beauty brands, while well-established with consumers, have problems that need to be quickly addressed.

Mass Appeal

The likes of Neutrogena, Aveeno and Clean + Clear are carried in countless drugstores and supermarkets, and brought in a combined $4.2 billion last year. But over time, they have failed to keep pace with the competition, and ceded relevancy and market share to more nimble competitors like Cerave and The Ordinary. The company said Monday that the beauty group’s sales fell 3 percent in the third quarter.

In October, Reuters reported that Kenvue had been mulling a sale of its beauty unit at a valuation of around $6 billion to $9 billion, but that it was unwilling to part with its core brands like Aveeno and Neutrogena. Despite falling revenue, management felt the division still had the potential for a turnaround.

Under the leadership of beauty veteran Andrew Stanleick, the unit has made positive inroads. Neutrogena launched buzzy campaigns with stars including the wrestler John Cena, singer Tate McRae and actress Hailee Steinfeld, and began to beef up its dermatological credentials again. The hair brand Ogx signed the actress and influencer Shay Mitchell as an ambassador. In its most recent earnings, the company said it had stabilised distribution for both brands after many years of decline, indicating greater retailer confidence, that unit sales for Neutrogena had increased for two consecutive quarters, and that the net sales decline was slowing.

But regaining lost momentum is difficult.

The slow progress at rehabilitating Kenvue’s brands could mean that Kimberly-Clark chooses to cut its losses and divest the unit.

Beauty brands need specialist management, marketing and innovation. Luxury fashion houses and consumer products conglomerates alike have repeatedly struggled to find lasting success managing their own beauty units. Without a dedicated team who understand the nuances of the industry and can deliver true innovation in marketing and product development, beauty brands can become stagnant.

New Beginnings

There’s also vast differences between selling painkillers and shampoo and moisturiser. In a presentation circulated in 2024, activist investor Starboard said Kenvue’s beauty brands had been weakened by a lack of a strong marketing and innovation culture when it was owned by Johnson & Johnson.

It’s unclear what value Kimberly-Clark sees in beauty. In the new combined company, Barclays estimated that only around 14 percent of sales would come from skin and beauty. Growing those brands will require continued and costly investment and innovation.

If Kimberly-Clark is willing to put in the legwork and carve out resources for beauty, and weather a possible short-lived hit on its margins and earnings, it may begin meaningfully growing again. Mass brands can be cool: Cerave and Aquaphor frequently go viral, hand sanitiser maker Touchland has become a Gen-Alpha favourite, and fresh indies like Starface have integrated themselves in youth culture. Marissa Lepor, an investment banker at LA-based The Sage Group said that even a less buzzy beauty business has benefits for Kimberly-Clark; it can now reach a customer it already has in categories like feminine care in other areas like skin and hair care. She said Kenvue’s brands have proven scale, and not all shoppers are looking for trendiness or newness.

But given beauty’s competitiveness and crowding, the unit will likely be wanting for analgesic: The pain will likely get worse before it gets better.

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