Bath & Body Works Stock Rises After Activist Barington Pushes for Sale

Shares of Bath & Body Works Inc. (NYSE:BBWI) rose 2.3% in extended trading on Thursday after activist investor Barington Capital Group disclosed a new position in the company and called for its board to pursue a sale.

Barington's Renewed Campaign

Barington CEO James Mitarotonda revealed a stake of approximately one million shares and is urging the personal-care retailer to immediately hire financial advisers to begin a sale process, according to a Bloomberg report. The activist firm argues that persistent leadership turnover has severely undervalued the company, despite its strong brand and cash flow.

In addition to exploring a sale, which Mitarotonda believes would attract significant interest from private equity firms, Barington is demanding that the company use its balance sheet for aggressive share repurchases. The firm plans to detail its demands in a formal letter to the board and is reportedly considering a proxy contest to gain board representation.

Company Performance and Response

This renewed pressure comes amid a challenging period for the retailer. Since its 2021 spinoff from Victoria’s Secret, Bath & Body Works has seen its stock decline by roughly 78% and its net income fall by 50%, according to compiled market data.

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A spokesperson for Bath & Body Works told Bloomberg that the company regularly engages with its investors and is committed to evaluating all options to enhance long-term shareholder value. The company added that it remains focused on executing its operational strategy while maintaining an open dialogue with shareholders.

Context and Background

This is not Barington's first engagement with the company. The activist investor previously targeted Bath & Body Works in 2019 when it was part of its former parent, L Brands. Barington has a long history of activism in the retail sector, with past campaigns at Macy’s Inc. and The Children’s Place Inc.

While Barington acknowledged that the strategy of current CEO Daniel Heaf is "well-reasoned," it maintains that management must act more decisively on capital allocation to restore shareholder value. Heaf, who joined from Nike last year, is implementing a plan to attract younger customers and expand digital distribution through partners like Amazon.