Kimberly-ClarkKMB

The company reported earnings of $1.80 per share, falling short of the $2.01 analysts expected. Revenue also came in light at $4.19 billion. The main culprit was a significant disruption in China, where social media claims about diaper quality hurt sales. Management noted that these claims were false, but the impact was large enough that they had to lower their sales and profit forecasts for the rest of the year.

While the China situation appears to be a one-time event rather than a flaw in the products, it highlights how quickly social media can dent a consumer brand's momentum. Outside of China, the company is still seeing gains from its productivity programs and price increases. For long-term owners, the focus remains on whether the company can move past this distraction and keep its core brands growing at the 2 percent rate needed to support its steady dividend.

See the full quarter, and how our tracked metrics did

Source: 8-K filing

Key highlights

• Profit outlook lowered: The company expects its total adjusted earnings to see a low single digit decline in 2026, which is a step back from previous targets as it handles temporary costs and business disruptions. These results include an expected 100 basis point hit to sales growth, or 1% of total revenue, primarily because of a social media situation in China.
• Diaper sales hit in China: A social media disruption involving false claims about diaper quality hurt performance in the international personal care division, which saw organic sales growth limited to 1.0% this quarter. The company confirmed product safety through independent testing, but it still expects these false allegations to impact both sales and profits in the near term.
• Efficiency driving margins higher: The adjusted gross margin, which measures how much profit is left after direct costs like labor and materials, rose 190 basis points to 38.8%. This improvement shows that the company is successfully lowering its production costs through a productivity program that helped offset higher spending on marketing and new product launches.
• North America sales dip: Organic sales in North America, which excludes the impact of selling off businesses or currency changes, fell 0.7% during the quarter. This decline was driven by a fire at a major distribution center in Los Angeles and changes in how much stock retailers kept on their shelves.
• Transformation costs weigh on results: Reported earnings fell 32.2% to $1.04 per share, largely because the company spent heavily on its strategic plan to restructure the business and prepare for the Kenvue acquisition. These one time charges, including $109 million for the acquisition, make the headline numbers look worse than the actual daily performance of the brands.

Our take: This was a soft quarter where outside disruptions masked real progress in cutting costs. While the social media issue in China and a warehouse fire hurt the numbers, profit margins are still healthy and moving toward long term goals. The underlying business remains steady as the company simplifies its portfolio.