Activist investor Barington Capital Group has built a stake in Bath & Body Works and is pressing the US personal care retailer to consider a sale, including a potential deal involving private equity, according to a report by Bloomberg citing unnamed people familiar with the matter.
Barington CEO James Mitarotonda told Bloomberg that Bath & Body Works is undervalued and that a series of management changes has weighed on the company’s performance. He believes the strength of its brands, market position and ability to generate cash could make the business attractive to potential buyers.
Mitarotonda said the company should appoint financial advisers to explore strategic alternatives and argued that “changes are needed” at the retailer. Barington is also seeking representation on the board and intends to issue a letter to directors in the coming weeks, according to the report.
LSEG data showed Barington held approximately 780,000 Bath & Body Works shares, equivalent to about 0.38% of the company, as of June 30.
The activist is additionally calling for measures to boost revenue and support the share price, including stock buybacks.
Bath & Body Works shares rose around 2% in after-hours trading following the report, although the stock remains down roughly 13% since the beginning of the year.
The Columbus, Ohio-based company has been attempting to revive its performance amid a difficult consumer environment. CEO Daniel Heaf, who took the role last year, has focused on product development and strengthening the retailer’s digital offering.
In August, Bath & Body Works forecast a larger-than-expected decline in current-quarter sales, citing weaker store traffic and broader pressure on shopping-mall visits. Heaf subsequently said turnaround initiatives were still at an early stage and had not yet fully offset challenges across the business.
Mitarotonda has attributed some of the company’s difficulties to repeated management turnover over the past five years, according to Bloomberg.
Barington has a history of targeting businesses connected to Bath & Body Works. Last year, the activist pushed for changes to the board of Victoria’s Secret and challenged the company’s poison-pill arrangements. Earlier, Barington campaigned for changes at L Brands, the former parent of both Victoria’s Secret and Bath & Body Works, ahead of the businesses’ separation.
Bath & Body Works and Barington reportedly did not immediately comment.
