Bath & Body Works faces fresh activist pressure as Barington builds stake and demands sale

Activist investor Barington Capital has built a new stake in Bath & Body Works and is pushing the retailer to put itself up for sale, arguing that the business would draw strong interest from private equity firms.

The investment firm, led by chief executive James Mitarotonda, has acquired around one million shares in the personal care and home fragrance retailer. News of the stake, which was first reported by Bloomberg, sent Bath & Body Works shares up 3.3% in after-hours trading.

What Barington wants

"We believe changes are needed at this company," Mitarotonda said in an interview with Bloomberg, pointing to the retailer's established brand value and reliable cash flow. "Given the market leadership nature of the company, the brand value, and the cash flow, there should be considerable interest."

Barington’s campaign is not just about a potential buyout. The activist investor also wants the Ohio-based company to focus on growing its revenue and aggressively repurchasing its own shares to boost investor returns.

Barington plans to lay out its case in detail in a formal letter to the Bath & Body Works board in the coming weeks. Mitarotonda also indicated that the firm is looking at securing representation on the retailer's board to help guide these changes.

Barington has a history of targeting retail and consumer brands where it believes management has lost focus or failed to capitalise fully on a brand's household appeal. By pushing for a sale now, Barington is betting that private equity buyers will see the steady, recurring revenue from Bath & Body Works' loyal customer base as a safe haven in an otherwise turbulent retail environment.

A history of activist pressure

This is a familiar battleground for both parties. Barington previously targeted the company in 2019, back when it was still operating under the L Brands umbrella—a retail empire that also included Victoria's Secret. That activist campaign pressured the retail group to address lagging performance and corporate governance, ultimately paving the way for L Brands to split into two separate public companies in 2021.

While Victoria’s Secret was spun off, Bath & Body Works emerged as a standalone entity, initially prized by investors for its highly profitable candle and soap lines. However, the post-pandemic retail market has proved more volatile, and activist investors have repeatedly taken aim at the company's margins and capital allocation strategies.

How Bath & Body Works has responded

In a statement, Bath & Body Works did not address Barington’s demands directly but said it regularly speaks with its investors and values their perspectives.

The company’s board and management team "regularly evaluate opportunities to enhance shareholder value and will continue to make decisions in the best long-term interests of the company and its shareholders," the statement said.

Whether the retailer's board will be receptive to a full buyout process, or if they will attempt to appease the activist with smaller concessions on share buybacks and board seats, remains to be seen.