Hedge Fund Starboard Value Calls Kenvue a Bargain

By Svea Herbst-Bayliss

(Reuters) – Hedge fund Starboard Value has labeled consumer products company Kenvue (NYSE:KVUE) as a bargain due to underperformance in its skin health and beauty segment.

Starboard Chief Investment Officer Jeffrey Smith highlighted potential for revenue and margin improvement within this segment that includes popular brands like Neutrogena and Aveeno, stating, "They need to focus on skin health beauty." He humorously remarked, "this sounds simple, right? Now they just have to do it."

Kenvue attributes its skin health brands' weak performance largely to poor product placement in stores. The skin health division, which also includes Clean & Clear, was the worst performer in the second quarter, with a nearly 4% decline in sales to $1.10 billion, missing Wall Street expectations.

A Kenvue spokesperson acknowledged Starboard's investment, indicating a willingness to engage with all shareholders. "We continue to advance our three strategic priorities of reaching more consumers, investing further behind our brands, and building a culture of performance and impact,” the spokesperson noted.

In August, the company announced plans to increase marketing spending and enhance in-store presence to boost sales. Starboard has acquired a significant stake in Kenvue, which produces products such as Band-Aid, Listerine, and Tylenol. Kenvue went public last year with a valuation of approximately $44 billion.

Since its listing in May 2023, Kenvue's stock price has declined 18%, recently trading around $22.90.

Smith spoke at the 13D Monitor Active-Passive Investor Summit.