Coverage of the October update disagrees on the cause of the sales decline. One newsletter estimates the China social-media drag at roughly 250 basis points on third-quarter organic sales, compared with about 100 basis points for the full year, and also cites a California distribution-center fire and freight costs as margin pressures. A separate report says Chinese authorities found no formamide in the company's products. The date and official source of that finding are not yet established, and the regulator's broader investigation has not been publicly resolved.
Attorneys should watch the final third-quarter results on November 5 for whether the China drag stays near the 100-basis-point full-year estimate or deepens. The outcome matters for the roughly $40 billion Kenvue acquisition, which remains on track to close by year-end. Reuters quoted an analyst warning that a prolonged reputational problem could delay market share recovery even after regulators close their investigation. Any formal findings from China's regulator, or a public resolution of the investigation, should be treated as the key trigger for reassessing the company's exposure.