Barington urges Victoria’s Secret to restructure board, drop poison pill

Activist investor Barington Capital Group is calling for Victoria’s Secret to restructure its board of directors and scrap its recently adopted shareholder rights plan. 

James Mitarotonda, the CEO of the New York-based hedge fund, which owns more than 1% of the company’s outstanding common stock, told Victoria’s Secret Chair Donna James in a letter Monday that it has failed to realize its potential since its separation from its parent company, L Brands, in 2021, with the current board overseeing the “destruction of $2.4 billion in shareholder value.”   

Mitarotonda argued that the company’s current leadership, including CEO Hillary Super, lacks the experience and strategic clarity necessary to lead a successful turnaround. Barington noted that Super has limited chief executive and public company experience with only a brief tenure in intimate apparel. 

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Mitarotonda also stressed concerns that Super has not gained the confidence of employees, and criticized her focus on relaunching secondary brands such as Pink and expanding into athleticwear, “while failing to prioritize the company’s core business and international growth,” saying it is a sign of a “lack of strategic focus.” 

Shares of Victoria’s Secret rose Monday morning after the letter was published on the investor’s website.

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Six of the nine current board of directors sat on the board during the company’s decline, and the remaining two independent directors “have limited experience successfully scaling global consumer businesses, according to Barington. 

“We believe that Victoria’s Secret requires a reconstituted Board comprised of directors with proven experience in brand revitalization, operational execution, international expansion, and shareholder value creation,” Mitarotonda wrote, adding 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.”  

Meanwhile, the activist investor, which also has a stake in Macy’s, said it is also disappointed by the company’s recently adopted “poison pill” plan, calling it counterproductive. 

“Equally troubling, it risks entrenching management and the Board at a time when meaningful change is warranted,” the letter continued. “Academic research and realworld experience demonstrate that companies with weak governance structures and strong anti-takeover provisions tend to trade at lower valuations.”

To help the brand “regain its footing and succeed,” the investor said the company needs to focus on core product categories, including bras, reinvest in digital and international markets and streamline its operating model. 

Barington said it had previously worked with L Brands to help implement key initiatives. During its tenure as an adviser to its board of directors, the share price of the company increased by 221.5%.