The New York-based hedge fund, Barington Capital, which holds more than 1% of Victoria's Secret, has raised significant concerns regarding the company's performance. Since its spin-off from its former parent company, L Brands, in 2021, Victoria's Secret has suffered an alarming decline, losing over $2.4 billion in shareholder value and underperforming against its competitors.
According to a report by Reuters on Sunday, Barington Capital is advocating for a complete overhaul of Victoria's Secret's board of directors. They are also pushing for the termination of the poison pill strategy that the company adopted in May to shield itself from potential hostile takeovers. This move comes after a notable decrease in Victoria's Secret shares, which have plummeted by more than 50% this year due to declining consumer demand. However, there was a slight uptick of about 3% in premarket trading.
James Mitarotonda, the founder and CEO of Barington Capital, emphasized the necessity for a restructured board that includes directors with demonstrated expertise in brand revitalization, operational execution, international expansion, and enhancing shareholder value. He stated that Victoria's Secret needs to prioritize core categories such as bras and the Angels campaign while accelerating growth in both digital and international markets.
Barington Capital has expressed concerns regarding the leadership of the company, particularly focusing on Chief Executive Hillary Super, who took the reins in September 2024. They noted her limited experience in managing public companies and criticized the existing board for lacking the requisite experience to rejuvenate the iconic brand. Prior to her role at Victoria's Secret, Super served as the CEO of the intimates brand Savage X Fenty.
Furthermore, Barington Capital sees significant potential in Victoria's Secret's beauty division, suggesting that it could hold a market value comparable to that of the entire company, which currently has a market capitalization of approximately $1.45 billion. The hedge fund's strategy also comes in light of the company's recent adoption of the poison pill plan, which was implemented to deter investment firm BBRC International Private Limited from increasing its stake, which has now risen to around 13%.
Barington Capital has a history of advocating for changes in retail companies, as seen in their past initiatives at L Brands, which led to the split into Victoria's Secret and Bath & Body Works. The firm also pushed for strategic changes at Macy's, advocating for the creation of a real estate unit and cost-cutting measures to enhance the share price. Earlier this year, Barington attempted its first full-scale boardroom challenge since 2015, aiming to appoint three directors to the board of casket maker Matthews International, but ultimately lost the vote.
As Victoria's Secret navigates these challenges, the call for a revamped leadership structure and a renewed focus on core business areas may be vital steps toward restoring the brand's former glory and shareholder confidence.
Reporting by Abigail Summerville in New York and Anuja Bharat Mistry in Bengaluru; Editing by Dawn Kopecki, Christian Schmollinger, and Maju Samuel. Our Standards: The Thomson Reuters Trust Principles.
Abigail is part of the M&A team and covers consumer and retail deals. She joined Reuters in 2022 from Debtwire, where she reported on leveraged finance and the primary debt market for three years. Her work has previously appeared in the Wall Street Journal, CNBC, and the Boston Business Journal. Abigail holds a degree in business journalism from Washington and Lee University.
