KIMBERLY CLARK CORP Q3 FY2024 earnings call

Mike Hsu stated the team is advancing the Powering Care strategy, confident in delivering above long-term growth algorithm in 2024. The company successfully completed a new organizational structure on October 1st. They're driving consumption and share growth via innovation and commercial execution, with productivity fueling innovation. However, discrete headwinds include retail inventory reductions, lower private label demand, weaker North American professional channels, and deceleration in Asia and Latin America.

Full year weighted category growth is likely closer to 2% vs previous 2%-3% range. Q4 top line is expected to be stronger than Q3 once transitory factors are normalized. Q4 gross margin will be impacted by increased advertising spend, discretionary costs, and back-loaded input costs.

Retail inventory reductions and service level improvements causing volatility; lower demand in private label businesses being exited; weaker demand in North American professional channels and deceleration in Asia and Latin America.

Q: Lauren Lieberman asked about retail inventory, service levels, and shelf space.

A: Mike Hsu and Nelson Urdaneta discussed retail inventory reductions due to last year's supply issues, service levels being consistent with historical levels, and no major shelf space disconnect. Mentioned consumer offtake in North America is strong but impacted by retail inventory changes, hurricane, and private label volumes.

Q: Nik Modi asked about market shares, innovation, and cannibalization.

A: Mike Hsu said they're focused on growing market shares and expanding the category, making good progress on market share with consumption solid in the US, and innovation driving premiumization and margin-accretive growth.

Q: Anna Lizzul asked about private label businesses and gross margin goal.

A: Mike Hsu explained they're moving out of private label to focus on branded business, private label mix shrinking from 4% in 2023 to 2% in 2025, and gross margin progress driven by innovation, cost management, and supply chain transformation.

Q: Bonnie Herzog asked about gross margin sustainability and promos.

A: Nelson Urdaneta talked about gross margin trajectory, productivity savings, and focus on volume and mix-driven growth with PNOC discipline. Mike Hsu mentioned focus on innovation and commercial execution with promotion as trial driver.

Q: Chris Carey asked about new organizational structure and Q4 operating profit.

A: Mike Hsu and Nelson Urdaneta discussed category growth deceleration, organizational structure benefits, and Q4 expectations with investments in brands and back-loaded input costs.

Q: Kevin Grundy asked about visibility and organizational change.

A: Mike Hsu and Nelson Urdaneta talked about visibility into market softness, organizational reorg progress, and focus on consumption over volume.

Q: Javier Escalante asked about external factors, private label, S/4 HANA, and strategic options.

A: Mike Hsu and Nelson Urdaneta explained external factors like inventory destocking, private label reduction plan, S/4 HANA implementation benefits, and steps to optimize international tissue and professional businesses.