Starboard Value, the prominent activist hedge fund, has made waves in the consumer products sector by nominating four directors to the board of Kenvue. This move follows months of criticism regarding the company’s underperforming skin health and beauty segment. The nominations come at a pivotal time for Kenvue, which has struggled with declining sales in key product categories. Starboard’s intervention signals its intention to drive change at Kenvue, especially in its critical beauty and skin health division that includes well-known brands like Neutrogena and Aveeno.
Activist Investor Pushes for Accountability at Kenvue
On Wednesday, Starboard Value revealed its slate of four director nominees to Kenvue’s board through a regulatory filing. The hedge fund’s chief investment officer, Jeffrey Smith, is among the nominees, underscoring the seriousness of its position. Smith has previously pointed to Kenvue’s skin health and beauty segment as a key area for improvement, highlighting a persistent decline in year-over-year sales. This segment, which includes iconic brands such as Neutrogena and Aveeno, has witnessed five consecutive quarters of sales drops.
Starboard’s push for change is rooted in its belief that Kenvue’s board should be more accountable and proactive in taking measures to reverse the company’s poor performance. In its filing, the hedge fund emphasized its belief that shareholders deserve a board that will prioritize tangible action and not shy away from difficult decisions. The nomination of Smith, along with other seasoned professionals, is intended to bring fresh perspectives and strategic direction to Kenvue’s leadership.
Struggling Skin Health Segment Contributing to Overall Decline
Kenvue, which was spun off from pharmaceutical giant Johnson & Johnson in 2023, has faced significant challenges since its debut on the New York Stock Exchange. Despite its strong portfolio of well-known brands, the company has struggled to maintain momentum, especially within the skin health and beauty segment. According to Starboard, the segment’s persistent decline in sales over the last five quarters has been a major concern, indicating a need for a strategic overhaul to revive its growth potential.
In its effort to address these challenges, Starboard has taken an active role in engaging with Kenvue’s management. The hedge fund first approached Kenvue in December 2024 with its director nominations and has since had multiple discussions with the company’s board chair, Larry Merlo. Starboard believes that Kenvue has significant untapped potential in its skincare and beauty business, which it intends to unlock by pushing for changes in leadership and strategy.
Board Nominees with Industry Expertise
Starboard’s proposed nominees for Kenvue’s board come with a wealth of experience in consumer products, retail, and corporate governance. Apart from Jeffrey Smith, the slate includes Michelle Millstone-Shroff, a former executive at Bed Bath & Beyond, and Cara Robinson and Bindu Shah, who have held senior roles at Unilever and Sephora, respectively.
The backgrounds of these nominees align with Starboard’s vision for Kenvue, particularly in addressing the underperformance in the skin health and beauty segment. Millstone-Shroff’s expertise in retail operations and supply chain management could help Kenvue streamline its processes, while Robinson and Shah’s experience in beauty and personal care brands brings valuable insights into the consumer-facing aspects of Kenvue’s portfolio.
Starboard has indicated that it will support the election of seven of Kenvue’s current board members at the company’s upcoming annual meeting later this year. However, the hedge fund has expressed concerns about the need for additional expertise on the board to bring Kenvue back on track. By nominating four highly qualified directors, Starboard seeks to strengthen the company’s leadership team and ensure that it remains focused on improving revenue growth and margins in the key skin health category.
Kenvue’s Stock Struggles Since Market Debut
Kenvue’s market performance has been a source of concern since its debut on the New York Stock Exchange in May 2023. As of the latest market close, Kenvue’s shares have fallen more than 20%, reflecting investor concerns over its lagging performance. The company’s market capitalization currently stands at $39.9 billion, a notable drop from its initial valuation.
The company’s upcoming fourth-quarter and full-year results, set to be reported this Thursday, will likely provide further insight into the extent of its challenges and the effectiveness of its current business strategies. The results will also be closely scrutinized by both investors and analysts, who will be looking for signs that Kenvue is addressing the weaknesses identified by Starboard.
Kenvue Faces Growing Pressure to Deliver Results
As Kenvue grapples with mounting pressure from investors and analysts, the company faces a critical juncture. The stock’s poor performance and stagnating sales in key product categories raise questions about the company’s long-term prospects if strategic changes are not implemented. Starboard’s involvement, however, has brought much-needed attention to Kenvue’s struggles, and its proposed board changes could help the company chart a new course toward growth and profitability.
With Starboard’s extensive experience in driving corporate turnarounds, Kenvue may benefit from a fresh approach to its operations. If Kenvue’s leadership embraces the hedge fund’s suggestions and the proposed changes to the board, the company could see improvements in its performance and, ultimately, its stock price. However, the road to recovery will not be easy, and it remains to be seen whether Kenvue can navigate these challenges and re-establish itself as a leader in the consumer products sector.
Conclusion
Starboard Value’s intervention at Kenvue comes at a critical time for the consumer products company, as it faces significant challenges in its core skin health and beauty segment. With a slate of highly qualified nominees, including its CIO Jeffrey Smith, Starboard is pushing for greater accountability and proactive measures to improve Kenvue’s performance. The company’s upcoming earnings report will be a key indicator of whether these changes are necessary to revitalize the business.
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