JNJ’s Consumer Business Expected to Be Driven by Innovation



Consumer segment

Johnson & Johnson (JNJ) is scheduled to report its third-quarter earnings on October 16. The company’s second-quarter growth in its Consumer business was below expectations. However, it expects to accelerate the segment’s growth in the second half of the year, driven mainly by the introduction of new products. The company’s other two business segments are Pharmaceuticals and Medical Devices.

Johnson & Johnson’s Consumer business consists of a range of products across its baby care, oral care, women’s health, beauty, wound care, and over-the-counter franchises. The segment generates the majority of its sales from the beauty and over-the-counter franchises.

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Major growth drivers for Johnson & Johnson’s Consumer business

In the third quarter, Johnson & Johnson (JNJ) is expected to deliver improved performance, mainly driven by innovation-led growth. The company registered sales of $3.5 billion, representing YoY (year-over-year) adjusted operational sales growth of ~0.9% in the second quarter. Excluding the impact of acquisitions and divestitures, the consumer segment’s YoY operational sales declined ~0.4%.

Johnson & Johnson witnessed declining sales in its baby care franchise in the first quarter due to increased competition and reduction in restocking and discounts ahead of the relaunch of its baby care line. Johnson & Johnson started shipments of its revamped baby care line in July, which is expected to register improved performance in the third quarter. The company’s increased investments in the last few quarters for increasing market penetration of its consumer brands are expected to yield positive results.

The iShares Core S&P 500 ETF (IVV) invests 1.5% of its total portfolio holdings in Johnson & Johnson. Peers Medtronic (MDT), Abbott Laboratories (ABT), and Procter & Gamble (PG) make up 0.54%, 0.52%, and 0.84%, respectively, of IVV’s total holdings.

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