Sept 10 (Reuters) – Activist investment firm Barington Capital Group has taken a new stake in Bath & Body Works and is pushing the personal care brand to explore a sale, Bloomberg News reported on Thursday, citing people familiar with the matter.
Shares of the Columbus, Ohio-based company rose about 2% in extended trading. The stock has fallen nearly 13% so far this year.
The fragrance maker has been navigating a challenging consumer spending environment while pursuing a turnaround under CEO Daniel Heaf, who took over last year, with a focus on product innovation and enhancing its digital platform.
Bath & Body Works is undervalued, has been hampered by unstable management and should retain advisers to seek buyers, the report said, citing Barington CEO James Mitarotonda.
Mitarotonda said in an interview that “changes are needed” at the company and that its market position, brand strength and cash generation should attract significant buyer interest, including from private equity, according to the report.
Bath & Body Works and Barington Capital did not immediately respond to a Reuters request for comment.
Barington had a position of about 0.78 million shares, or a 0.38% stake in the company, according to LSEG data, as of June 30.
The activist investor also wants Bath & Body Works to boost revenue and improve its stock price by repurchasing shares, the Bloomberg report added. The investment firm plans to publish a letter to the board in the coming weeks and is seeking board representation.
In August, Bath & Body Works forecast a wider-than-expected decline in current-quarter sales hurt by weak store traffic as well as broader weakness in mall traffic. Heaf told Reuters that progress in turnaround efforts, since its early, has yet to offset challenges across the broader business.
Mitarotonda has also blamed serial management changes over the past five years for hurting sales and the brand, the Bloomberg report said.
Last year, Barington pressed Victoria’s Secret to overhaul its board and end its “poison pill” plan. Earlier, the activist investor pushed for changes at L Brands, the former parent of Victoria’s Secret and Bath & Body Works, ahead of the companies’ eventual separation.
(Reporting by Anuja Bharat Mistry in Bengaluru; Editing by Tasim Zahid)
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