Barington Takes New Stake in Bath & Body Works, Pushing for Sale

Bath & Body Works (BBWI) stock rose by 2.3% in extended trading on Thursday, following reports that activist investor Barington Capital Group has acquired a new position in the specialty retailer and is urging its board to consider selling the company. Barington CEO James Mitarotonda revealed a stake of around one million shares in an interview with Bloomberg, suggesting renewed involvement in the Columbus, Ohio-based firm he targeted in 2019 under its previous corporate name, L Brands.

The activist group argues that frequent leadership changes have significantly reduced the retailer's valuation, despite its strong brand and cash flow. Mitarotonda insisted that the personal-care chain should immediately hire financial advisors to start a sale process, expressing confidence that its market leadership would attract private equity buyers.

Apart from a potential sale, Barington is also pushing for the company to use its financial resources for aggressive share buybacks to boost shareholder value. The activist investor intends to present its demands in a future letter to the board and is considering a proxy contest for board seats, as per Bloomberg. Bath & Body Works responded by stating that it regularly interacts with investors and is committed to exploring all options to increase shareholder value in the company's best long-term interests.

Management reiterated its commitment to executing its operational strategy while maintaining open communication with its investor community. This fresh activist pressure underscores public market doubts about the retailer's turnaround prospects following years of inconsistent financial results. Since splitting off Victoria’s Secret and rebranding in 2021, Bath & Body Works' stock has fallen about 78%, alongside a 50% decrease in net income, according to market data.

Despite these challenges, Mitarotonda praised current CEO Daniel Heaf, who joined last year from Nike Inc. to implement a revamped strategy targeting younger customers. While acknowledging Heaf's plan, which includes expanding digital distribution through Amazon and adjusting promotional tactics, Barington believes management must be more decisive in capital allocation.

This move by Barington, an active retail investor since 2000 with a history of interventions at Macy’s, Chico’s FAS, and The Children’s Place, sets the stage for increased strategic scrutiny over Bath & Body Works' future.