Two years ago, when Johnson & Johnson announced it was spinning off its consumer brands including Tylenol, Band-Aid, Motrin, Sudafed, and Neutrogena into a new company called Kenvue, investor anticipation was high. The thinking was simple: The company was packed with household names that had room to grow, untethered from all the problems of the J&J mothership.
Kenvue shares rose 22% in their trading debut in May 2023. But the honeymoon was short-lived. Barely 15 months after the spinoff, activist investors tired of anemic growth, started to demand change. Since last autumn, Starboard, Third Point Capital and Toms Capital Investment Management have all pressured the company to find ways to accelerate growth and increase profit margins.
The leadership shakeup comes on the heels of a rough earnings call. Kenvue announced on Monday that in its most recent quarter, it expects net sales to fall 4%, continuing a downward trend. As a result of that weak performance, shares fell from their all time high of about $27 in 2023 to around $21.25 today. In contrast, the S&P 500 has risen more than 40% in the last two years.
The practice is not unusual in corporate America; spinoffs are often repositories for brands the parent company did not want. But Kenvue struggled to balance and diversify its own brand portfolio, and figure out a formula that would work outside of the J&J umbrella. In retrospect, a boosterish comment from Mongon on the day of the spinoff, who had been leading J&J’s consumer business since 2019, seems like a warning sign. “We are the only company of our size covering all of consumer health,” Mongon said in 2023.
Fortune was unable to reach Mongon for comment.
With Perry at the helm now, Kenvue has a leader who is a veteran of Procter & Gamble, and intimately familiar with periodic portfolio resets that activists have clamored for.
But Kenvue’s shares barely budged after the CEO and strategic overview news. That suggests investors are not expecting Perry—or whoever becomes permanent CEO—to turn things around quickly.
