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Victoria’s Secret & Co. is being targeted by two activist investors seeking to overhaul the retailer’s board.
The pressure comes as the lingerie retailer’s market valuation has collapsed to about $1.5 billion from the $6.5 billion it commanded after its 2021 split from Bath & Body Works.
Last week, Barington Capital Group, which has built a stake of more than 1% in the lingerie retailer, issued a letter to the Victoria’s Secret’s board that blamed the retailer’s struggles on high senior management turnover and a “lack of marketing and merchandising focus,” citing the re-launch of secondary brands like PINK and expansion into athleticwear as examples.
Also cited as a factor was an unclear vision. Barington added, “We believe that the company’s attempt to simultaneously embrace disparate cultural narratives has resulted in a diluted brand identity, while its core business — Victoria’s Secret’s leading bra and intimate apparel franchise — has suffered from seeming inattention and mismanagement.”
To recover, Victoria’s Secret should refocus on core categories like bras, launch “bold, exciting, and imaginative marketing campaigns” (including reintroducing the Angels campaign), accelerate growth in digital and international markets, and eliminate underperforming initiatives, according to Barington.
Barington further argued that leadership, including Hillary Super, current CEO and former CEO of intimates upstart Savage X Fenty, lacks the experience to lead a turnaround. Six of the nine current board members sat on the board during the company's decline, and the remaining two independent directors “have limited experience successfully scaling large, global consumer businesses,” according to Barington.
Barrington wrote that the retailer “should consider replacing a majority — if not all — of the board with independent directors who bring relevant backgrounds, fresh perspectives, and a strong track record of value creation.”
In a separate letter sent to Victoria’s Secret’s board on June 9, BBRC International, which has a nearly 13% stake in the retailer and is led by Australian entrepreneur Brett Blundy, likewise wondered “why shouldn’t stockholders demand an immediate reconstitution of the board,” given the stock’s underperformance.
BBRC questioned the timing of share buybacks and the acquisition of Adore Me and specifically called for the ouster of board chair Donna James, who has been a director at Victoria’s Secret and, before that, parent company L Brands, for more than 20 years. Also questioned was why several executives have been replaced, but no board members have. BBRC said, “When will directors face the same performance-based consequences imposed on management?”
Victoria’s Secret, in the face of newer competition from Aerie, SKIMS, and Fenty, has been modernizing its approach by embracing more body-positive messages and inclusive sizing while bringing back the signature Fashion Show to revive some buzz. In its first quarter, comps were down 1% but exceeded expectations, with management indicating that a focus on newness and its PINK collection that targets teen girls and college-aged women is paying off.
Super said in a statement, “I am pleased with the strength the business demonstrated during the March and April timeframe, which included continued momentum in our powerhouse beauty business, ongoing strength in PINK apparel, and newness in sport and swim as we reclaim our position as a full lifestyle brand.”