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Segments of Business
 6 Months Ended
Jul. 02, 2023
Segment Reporting [Abstract]  
Segments of Business Segments of Business and Geographic Areas
The Company has historically operated as part of the Parent, reported under the Parent’s segment structure and historically the Chief Operating Decision Maker (“CODM”) was the Consumer Health Segment Operating Committee. As the Company is transitioning into an independent, publicly traded company, the Company’s CODM was determined to be the Company’s Executive Committee as they will be responsible for allocating resources and assessing performance. Based on how the CODM assesses operating performance on a regular basis, makes resource allocation decisions and designates responsibilities of their direct reports, the Company realigned its historical segment structure and determined it is organized as three operating segments, which are also its reportable segments: (i) Self Care, (ii) Skin Health and Beauty, and (iii) Essential Health. Prior period presentations conform to the current segment reporting structure.
Segment profit is based on Operating income (loss) excluding depreciation and amortization, restructuring, Separation-related costs, Other (income) expense, net, operating, and unallocated general corporate administrative expenses (referred to herein as “Adjusted Operating Income”) as management excludes these items in assessing segment financial performance. General corporate/unallocated expenses, which includes treasury and legal operations and certain expenses, gains and losses related to the overall management of the Company, are not allocated to the segments. In assessing segment performance and managing operations, management does not review segment assets.
The Company operates the business through the following three reportable business segments:
Reportable SegmentsProduct Categories
Self Care
Cough, Cold and Allergy
Pain Care
Other Self Care (Digestive Health, Smoking Cessation and Other)
Skin Health and Beauty
Face and Body Care
Hair, Sun and Other
Essential Health
Oral Care
Baby Care
Other Essential Health (Women’s Health and Wound Care)
The Company’s product categories as a percentage of Net sales for the fiscal years 2022, 2021 and 2020 were as follows:
202220212020
Cough, Cold and Allergy13 %12 %12 %
Pain Care13 %11 %10 %
Other Self Care14 %15 %14 %
Face and Body Care20 %22 %22 %
Hair, Sun and Other9 %8 %9 %
Oral Care10 %11 %11 %
Baby Care10 %10 %11 %
Other Essential Health11 %11 %11 %
Total
100 %100 %100 %
Segment Net Sales and Adjusted Operating Income
Segment net sales and adjusted operating income for the fiscal years 2022, 2021 and 2020 were as follows:
Net Sales
(Dollars in Millions)202220212020
Self Care$6,030 $5,643 $5,235 
Skin Health and Beauty4,350 4,541 4,450 
Essential Health4,570 4,870 4,782 
Total
$14,950 $15,054 $14,467 
Adjusted Operating Income
(Dollars in Millions)
2022(4)
2021 (1)(4)
2020 (1)(4)
Self Care$2,088 $1,952 $1,858 
Skin Health and Beauty708 878 889 
Essential Health1,111 1,224 1,250 
Total adjusted operating income
3,907 4,054 3,997 
Reconciliation to income (loss) before taxes:
General corporate/unallocated expenses(298)(272)(277)
Other (income) expense, net, operating (Note 10)
23 (15)(3,871)
Restructuring(2)
(100)(116)(82)
Depreciation and amortization(644)(731)(746)
Separation-related costs(3)
(213)— — 
Total operating income (loss)
2,675 2,920 (979)
Other expense (income), net (Note 10)
38 (5)37 
Income (loss) before taxes
$2,637 $2,925 $(1,016)
__________________
(1)For the fourth quarter of 2022, the Company updated the methodology of allocation for certain selling expenses to align with segment financial results as measured by the Company, including the Chief Operating Decision Maker. All prior periods have been recast to conform to current presentation. Total adjusted operating income did not change as a result of this change.
(2)Exclusive of the restructuring expense included in other (income) expense, net, operating. See Note 16.
(3)For the fourth quarter of 2022, the Company updated methodology to no longer allocate non-recurring Separation-related costs to align with segment financial results as measured by the Company, including the Chief Operating Decision Maker. This change only impacted fiscal year 2022 given there were no non-recurring Separation-related costs in any other period presented.
(4)The Company adjusted the allocation for certain intangible asset amortization costs within Cost of sales to align with segment financial results as measured by the Company, including the Chief Operating Decision Maker. Accordingly, the Company has updated its segment disclosures in all prior periods. Total adjusted operating income did not change as a result of this update.
Depreciation & Amortization
Depreciation and amortization by segment for the fiscal years 2022, 2021 and 2020 were as follows:
Depreciation and Amortization
(Dollars in Millions)
2022(1)
20212020
Self Care$202 $212 $205 
Skin Health and Beauty247 305 325 
Essential Health195 214 216 
Total
$644 $731 $746 
__________________
(1)The Company adjusted the allocation for certain intangible asset amortization costs within Cost of sales to align with segment financial results as measured by the Company, including the Chief Operating Decision Maker. Accordingly, the Company has updated its depreciation and amortization disclosures in the impacted period. Total depreciation and amortization did not change as a result of this update.
Geographic Information
Net sales are attributed to a geographic region based on the location of the customer and for the fiscal years 2022, 2021 and 2020 were as follows:
Net Sales
(Dollars in Millions)202220212020
North America(1)
$7,418 $7,284 $7,095 
Europe, Middle East, and Africa3,188 3,436 3,332 
Asia-Pacific3,146 3,276 3,013 
Latin America1,198 1,058 1,027 
Total
$14,950 $15,054 $14,467 
__________________
(1)Includes U.S. net sales in fiscal years 2022, 2021 and 2020 of $6,599 million, $6,516 million and $6,357 million, respectively.

Long-lived assets consisting of property, plant and equipment, net of accumulated depreciation, intangible assets, net and goodwill are attributed to geographic locations as of January 1, 2023 and January 2, 2022 as follows:
Long Lived Assets(2)
(Dollars in Millions)20222021
North America(1)
$9,582 $9,687 
Europe, Middle East, and Africa8,244 9,169 
Asia-Pacific2,736 3,204 
Latin America296 278 
Total
$20,858 $22,338 
__________________
(1)Includes U.S. long lived assets in fiscal years 2022, 2021 and 2020 of $7,469 million, $7,527 million and $7,631 million, respectively.
(2)Long-lived assets include property, plant and equipment, net for fiscal years 2022, and 2021 of $1,820 million and $1,827 million, respectively, and intangible assets and goodwill, net for fiscal years 2022 and 2021 of $19,038 million and $20,511 million, respectively.
Major Customers
One customer accounted for approximately 13%, 14% and 14% of total net sales in fiscal years 2022, 2021 and 2020, respectively.
Segments of Business
The Company has historically operated as part of the Parent, reported under the Parent’s segment structure and historically the Chief Operating Decision Maker (“CODM”) was the Consumer Health Segment Operating Committee. As the Company transitioned into an independent, publicly traded company, the Company’s CODM was determined to be the Kenvue Leadership Team as they are responsible for allocating resources and assessing performance. Based on how the CODM assesses operating performance on a regular basis, makes resource allocation decisions, and designates responsibilities of their direct reports, the Company is organized as three operating segments, which are also its reportable segments: (i) Self Care, (ii) Skin Health and Beauty, and (iii) Essential Health. Prior period presentations conform to the current segment reporting structure.
Segment profit is based on Operating income, excluding depreciation and amortization, non-recurring Separation-related costs, restructuring expense, Other operating expense (income), net, and unallocated general corporate administrative expenses (referred to herein as “Adjusted operating income”), as management excludes these items in assessing segment financial performance. General corporate/unallocated expenses, which include treasury and legal operations and certain expenses, gains and losses related to the overall management of the Company, are not allocated to the segments. In assessing segment performance and managing operations, management does not review segment assets.
The Company operates the business through the following three reportable business segments:
Reportable SegmentsProduct Categories
Self CareCough, Cold and Allergy
Pain Care
Other Self Care (Digestive Health, Smoking Cessation, and Other)
Skin Health and BeautyFace and Body Care
Hair, Sun and Other
Essential HealthOral Care
Baby Care
Other Essential Health (Women’s Health and Wound Care)
The Company’s product categories as a percentage of Net sales for the fiscal three and six months ended July 2, 2023 and July 3, 2022 were as follows:
Fiscal Three Months EndedFiscal Six Months Ended
July 2, 2023July 3, 2022July 2, 2023July 3, 2022
Cough, Cold and Allergy 13 %13 %14 %12 %
Pain Care 12 11 13 13 
Other Self Care 16 15 15 15 
Face and Body Care19 20 19 20 
Hair, Sun and Other10 10 10 9 
Oral Care10 10 10 10 
Baby Care9 10 9 10 
Other Essential Health11 11 10 11 
Total100 %100 %100 %100 %
Segment Net Sales and Adjusted Operating Income
Segment Net sales and Adjusted operating income for the fiscal three and six months ended July 2, 2023 and July 3, 2022 were as follows:
Net SalesNet Sales
Fiscal Three Months EndedFiscal Six Months Ended
(Dollars in Millions)July 2, 2023July 3, 2022July 2, 2023July 3, 2022
Self Care$1,661 $1,481 $3,301 $2,946 
Skin Health and Beauty1,147 1,126 2,258 2,138 
Essential Health1,203 1,197 2,304 2,310 
Total
$4,011 $3,804 $7,863 $7,394 
Adjusted Operating IncomeAdjusted Operating Income
Fiscal Three Months EndedFiscal Six Months Ended
(Dollars in Millions)July 2, 2023July 3, 2022July 2, 2023July 3, 2022
Self Care$576 $524 $1,158 $998 
Skin Health and Beauty201 243 350 370 
Essential Health250 314 461 560 
Total Adjusted operating income(1)(2)
$1,027 $1,081 $1,969 $1,928 
Reconciliation to Income before taxes:
Depreciation and amortization148 161 300 326 
Separation-related costs102 49 200 59 
Restructuring(3)
— 24 — 38 
Other operating expense (income), net1 13 (16)8 
General corporate/unallocated expenses74 64 143 116 
Total operating income$702 $770 $1,342 $1,381 
Other expense (income), net10 (5)40 (6)
Interest expense, net53 — 54 — 
Income before taxes$639 $775 $1,248 $1,387 
__________________
(1)For the first quarter of 2023, the Company adjusted the allocation for certain intangible asset amortization costs within Cost of Sales to align with segment financial results as measured by the Company, including the CODM. Accordingly, the Company has updated its segment disclosures to reflect the updated presentation in all prior periods. Total Adjusted operating income did not change as a result of this update.
(2)We define Adjusted operating income as U.S. GAAP Operating income excluding depreciation and amortization, Separation-related costs, restructuring expense, Other operating expense (income), net, and general corporate unallocated expenses that are not part of our measurement of segment performance. Management uses Adjusted operating income to assess segment financial performance.
(3)Exclusive of the restructuring expense included in Other operating expense (income), net on the Company’s Condensed Consolidated Statements of Operations.