By Svea Herbst-Bayliss

(Reuters) -Hedge fund Starboard Value called consumer products company Kenvue a bargain and said its skin health and beauty segment's lackluster growth is the reason for the stock's underperformance.

Starboard Chief Investment Officer Jeffrey Smith said there is an opportunity to improve revenue growth and margins at the segment which has the Neutrogena and Aveeno brands.

"They need to focus on skin health beauty," Smith said, joking, "this sounds simple, right? Now they just have to do it."

Kenvue has attributed the lackluster performance of its skin-health brands primarily to missteps around the placement of its products in stores.

Kenvue's skin health business, which also houses brands such as Clean & Clear, was the worst performer its three segments in the second quarter, recording a nearly 4% decline in sales to $1.10 billion and missing Wall Street estimates.

A company spokesperson said Kenvue is aware of Starboard's investment and will engage with the firm as well as with all other 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 said.

The company said in August that it would increase marketing spending and improve its brands' in-store presence, among other measures, to boost sales.

Starboard has built a sizable stake in the consumer products company that makes Band-Aid, Listerine, and Tylenol. Kenvue went public last year and is worth roughly $44 billion.

Kenvue, previously a part of Johnson & Johnson, has seen its stock price fall 18% since the company was listed publicly in May 2023. It was little changed in Tuesday afternoon trading at $22.90.

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

(Reporting by Svea Herbst-Bayliss in New York and Leroy Leo in Bengaluru; Editing by Kirsten Donovan, Shounak Dasgupta and Mark Porter)