Just after beating profit estimates for the first quarter of 2024, Kenvue (NYSE:KVUE) has announced plans to reduce its global workforce by 4%. Formerly a division of Johnson & Johnson (NYSE:JNJ), the consumer health company is best known as the owner of the Tylenol and Band-Aids brands. Now, despite an impressive earnings report, Kenvue is preparing for job cuts with the goal of putting the funds it will generate towards spurring growth in its popular divisions. News of the Kenvue layoffs hasn’t pushed shares down yet. But even as shares continue trending upward, investors should be mindful of this trend, especially as these aren’t the first job cuts the company has implemented recently.
A Closer Look at the Kenvue Layoffs
You might remember reading about job cuts at Kenvue recently. That’s because the company kicked off April 2024 by eliminating part of its Neutrogena staff. The first Kenvue layoffs only impacted 135 people at a specific division. However, these new job cuts will likely mean the elimination of more than 900 workers, according to a report from FiercePharma.
As noted, KVUE stock is up today, indicating that the market is reacting well to news of the layoffs. Some of this momentum is likely due to the company’s recent earnings beat. However, the company’s focus on growth as it reduces its global workforce is worth noting. CFO Paul Ruh recently addressed the Kenvue layoffs. In his words:
“As we exit services under the TSA, these initiatives will structurally position Kenvue for success in the future and create long-term shareholder value. These initiatives will enable Kenvue to adjust its cost structure and ways of working to become more competitive while bolstering our ability to deliver on our long-term algorithm of profitable growth, robust durable cash flow generation, and disciplined capital allocation.”
While trading has been volatile for KVUE stock lately, shares are still in the green for the past month.
Despite all the turbulence, it is clear that multiple rounds of layoffs aren’t impacting the company too much. That said, Kenvue has benefitted from trends such as fear of rising inflation due to the popular healthcare products it produces. As InvestorPlace contributor Chris Markoch notes, this makes it a “viable safe-haven stock” for either good or bad economic conditions.
Having macro trends shift in its favor is no doubt helpful. Yet Kenvue still seems like a solid company focused on streamlining operations. Investors shouldn’t be too worried about what the Kenvue layoffs will mean for its immediate future.
On the date of publication, Samuel O’Brient did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
