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Yahoo
28-06-2025
- Business
- Yahoo
Victoria's Secret hired a superstar CEO to turn around the flagging brand. But a 50% stock drop has activist investors circling
As bras go, wireless is winning. On Victoria's Secret's latest earnings call earlier this month, CEO Hillary Super explained that the brand's So Obsessed underwire-free push-up bra was a fast-growing hit, calling it 'a standout,' with 30% year-over-year growth and a 'deep resonance with the millennial customer.' Those comments landed well with Morgan Stanley analyst Alexandra Stratton, who wrote in a subsequent research note that Super seemed to have a better handle on fashion trends than the previous management team. 'Super's commentary demonstrated a deeper understanding of how the intimates industry has evolved in recent years,' she wrote. Several other analysts sprinkled their response to the earnings call with optimistic observations about Super, who has led the lingerie shop since last September and was hired to revamp a brand that has spent the past six years careening from one disaster to the next. And yet the CEO is also contending with a host of problems. Like other retail leaders, Super is navigating Trump's tariffs and uncertainty about consumer spending. The company's stock is down 50% since January, following a December surge on signs of a turnaround. (The share price hovers at $20 at the time of writing, compared to $22 when she took over.) She's also still reeling from the effects of a security breach last month that forced the company to shut down its website for three days. And worst of all, two activist investors—Australia's Brett Blundy, the company's largest shareholder, and hedge fund Barrington Capital—have the retailer in their crosshairs, and have called for an overhaul of its board. Barrington Capital also suggested in an open letter that a reconstituted board needed to evaluate whether Super was the right person for the CEO job. In an email to Fortune, the lingerie company said: 'The board has full confidence in Hillary's vision, leadership, and her ability to unlock the potential of our iconic brands.'Super has laid out a turnaround strategy that includes reasserting the brand's authority in bras, and growing categories like youth-focused PINK, beauty, and sport, while reimagining the company's marketing and sales strategy to better suit the way customers are shopping now. But after a rollercoaster few years, Victoria's Secret finds itself once again at a critical inflection point as it tries to reestablish its place in the wallets and boudoirs of American consumers. Hillary Super's arrival at Victoria's Secret 10 months ago was met with enthusiasm from Wall Street. When the leadership change was announced in August, the company's share price jumped 16%. The board poached Super from Rihanna's Savage X Fenty, where she had been CEO for a year, offering her a compensation package that totalled $18 million for the year, including a signing bonus and a one-time award. Super brought a certain cool factor thanks to her role at Fenty. She also brought vast experience, having spent more than three decades in retail leadership roles, including at Anthropologie, a cult-favorite label and subsidiary of Urban Outfitters, where she spent four years in top roles, including president and global CEO. But with Victoria's Secret, Super inherited a beleaguered brand stained by upheaval and scandal. In its mid-aughts heyday, the company reached a market share of over 30%, and raked in around $8 billion in revenue in 2016 under CEO Sharen Turney. But Turney was dismissed in 2017 and replaced by L Brands owner Les Wexner. Under his leadership, and that of his chief lieutenant, longtime senior leader Ed Razek, the company missed important retail trends like athleisure wear. Its marketing also fell out of step with major cultural shifts, and remained overtly sexual and at the height of the #MeToo in 2019 and 2020, Victoria's Secret became the focus of two scandals involving its male leadership. First, Wexner's close relationship with late sex offender Jeffrey Epstein became a PR liability, along with reporting that Epstein posed as a scout for Victoria's Secret to lure and abuse aspiring models. (Wexner has previously said that he is embarrassed by his ties to Epstein, whom he called 'depraved.') Then, in 2020, the New York Times published a bombshell investigative piece outlining allegations of sexual harassment at the company, specifically involving Rezek. By that time, Victoria's Secret's entire ethos had largely fallen out of favor. L Brands decided to spin off the company, which it did in 2021, separating it from its former sister company, Bath & Body Works. (L Brands has since rebranded as Bath & Body Works.) In 2020, Wexner, who purchased Victoria's Secret in 1982 when it was a small chain of stores on the verge of bankruptcy, stepped down. Once known for turbocharging the careers of models like Karlie Kloss and Heidi Klum, Victoria's Secret went about trying to transform its reputation after Wexner's exit. Under Martin Waters, who was named CEO of the spun-off company, the over-the-top fashion shows featuring diamond-studded fantasy bras were out, and the Victoria's Secret Angels, a rotating group of It-girl models who had become synonymous with the label, were disbanded. Instead, the VS Collective, a group of brand ambassadors of various ethnicities and sizes, known for their careers in sports or technology, would become the face for the brand. But while this top-to-bottom revamp sparked a conversation about feminism and the definition of 'sexy,' it didn't ignite much passion in consumers. The rebranding was deemed inauthentic by some critics, and an overcorrection by others. The company's market share had fallen to 18.7% by 2022. The company changed strategies again while Waters was still in the corner office, and began reclaiming some of its supermodel history, hiring Hailey Bieber and Emily Ratajkowski, and bringing back its fashion shows. In a letter about Waters' departure, the board said he had 'established a foundation for VS&Co to enter its next chapter.' Super is now tasked with finding ways to thread the needle between Victoria's Secret's past and future. On the recent earnings call, the CEO said that she felt the company's marketing had become 'too serious' in recent seasons. 'We have an opportunity to have a more energetic, more joyful expression of VS,' she said. But activists may put a dent in Super's plans. In March of this year, BBRC International Private, an investment company run by Australian billionaire Brett Blundy, increased its stake in Victoria's Secret to about 13%, prompting the retailer to adopt a poison pill to ward off a potential takeover. On June 9, Blundy sent the Victoria's Secret board a letter decrying its oversight of the retailer and its management team. Just a week later, the New York-based hedge fund Barington Capital said it would add to its stake in Victoria's Secret—it's thought to have over 1% now, though the exact figure isn't yet known—as it called for the company to overhaul its board, refocus on the brand's core products, and drop the poison pill. 'Since its spin-off and public listing in 2021, the company has lost over $2.4 billion in shareholder value,' Barington Capital chair and CEO James Mitarotonda wrote in an open letter to the board. Neither Barington Capital nor Brett Blundy's investment company responded to Fortune's request for activist investors feel they know what Victoria's Secret needs. Blundy, the Australian billionaire, has a history in the intimates business and has recently purchased another lingerie brand. His letter to the company called attention to a total stockholder return of -64% since 2021 and what it called 'catastrophic' capital allocation, including the purchase of Adore Me in 2022, which 'has failed to generate meaningful returns.' Barington Capital, meanwhile, has already successfully advocated for changes at Victoria's Secret once, just before it was spun out from L Brands. 'The share price of L Brands increased by 221.5% during our tenure as an advisor to its board of directors,' Mitarotonda wrote in his open letter. Given that Victoria's Secret is one of the world's most iconic brands, the letter said, 'the company should be creating significant long-term value for its shareholders.' 'Victoria's Secret has meaningfully underperformed its peers and the market as a whole since becoming an independent company,' the activist argued, pointing to lackluster growth. He also said Super lacked CEO experience, since her stint at Savage X Fenty only lasted for one year. But Barington's harshest criticisms were for the board and its chair, Donna James, a longtime director at Victoria's Secret. The hedge fund believes the board has the wrong skill sets and needs refreshing. 'Of the current nine directors,' it noted, 'six have presided over the company's decline since its public listing.' Victoria's Secret is pushing back against the activist's claims, pointing to Super's focus on bras, and steady improvements at the company, with momentum growing in its Pink brand, as well as its healthy and beauty division. Although the company lowered its sales guidance for the second quarter when it announced its first quarter results earlier this month, it also reported earnings per share of 9 cents, beating market expectations of 4 cents. At $1.35 billion, sales were slightly ahead of analysts' expectations, while the retailer also reduced its overall losses compared to the same period in the previous year. A Wells Fargo analyst also heralded Super's work at the company, noting that Victoria's Secret saw improved performance in North American sales and PINK brands in the second half of last year, following her hiring. Bloomberg research predicts full-year sales would beat the company's guidance and reach $6.2-$6.3 billion in the second half of this year. And a JPMorgan analyst defined the current moment as 'early in the turnaround.' Some retail-watchers appear ready to give Super the time to prove herself. In a LinkedIn post, Neil Saunders, a retail analyst and consultant, wrote: 'Victoria's Secret is mainly a brand for women. It was run by men for quite some time, and they ultimately made a hash of it.' 'Now Hillary Super is at the helm and is starting to reinvent things. She has been in post for less than a year and has to be given a chance to put her vision into practice. But the carping from activist investors has already begun,' he continued. 'Activist investors are also mostly men. I honestly think that sometimes these finance men should sit down and take a seat, because they don't really understand the women's fashion business.' Other defenders also question whether Super is being judged prematurely. Patricia Lizarraga, managing partner and chief investment officer of Hypatia Capital, which manages an exchange-traded fund invested in public companies run by women, says that she was 'shocked' that activist pressures have arrived so quickly. Then again, she notes, activist investors are more likely to go after women CEOs, according to studies. Interference from activists also appears to be one of many reasons that women have shorter tenures as CEOs. 'We have some real superstars that have turned around fallen brands,' she said, pointing to CEOs like Fran Horowitz, who has led a revival of Abercrombie & Fitch. 'There's a model to follow.' Super has recently hired new senior leaders, including a new chief marketing officer and a new creative director. On the latest earnings call, she referred to her leadership team as the 'super squad,' quoting a fashion magazine's play on her name. Together, the squad will have to move as quickly as possible. This story was originally featured on
AU Financial Review
18-06-2025
- Business
- AU Financial Review
Top executives see take-home pay stagnate amid golden parachute slump
The take-home pay of the country's top 100 chief executives has largely flatlined over the past decade, pushed lower by a slump in multimillion-dollar golden parachutes, research commissioned by super funds shows. The highest-paid chief executive in Australia was outside the ASX 100 – Victor Herrero, recently departed from Lovisa, the fast-fashion jewellery chain backed by billionaire Brett Blundy. The study also included those based in the United States, with News Corporation's Australian chief executive Robert Thomson topping the list with $41.9 million.
Bloomberg
18-06-2025
- Business
- Bloomberg
Victoria's Secret CEO Is Scorned by Impatient Activist Investors
Victoria's Secret & Co. spared no expense to lure Chief Executive Hillary Super away from Rihanna: It paid nearly $760,000 for her relocation costs, including real estate agent fees and six months of temporary housing, and more than $11,000 for personal security. Nine months into that big bet, investors including Australian billionaire Brett Blundy aren't impressed.
Yahoo
16-06-2025
- Business
- Yahoo
Activist Investor Barington Jumps In to Pressure Victoria's Secret
Victoria's Secret & Co. has another unhappy investor calling for change. The lingerie giant, which has been working on a reboot under chief executive officer Hillary Super and fending off BBRC International, is now taking flack from James Mitarotonda, whose Barington Capital has a stake in the company of more than 1 percent. More from WWD Victoria's Secret in 'Recovery Phase' After Cyber Incident Brett Blundy's BBRC Blasts Victoria's Secret Ahead of Earnings Report Victoria's Secret Reveals Preliminary Q1 Results, but Delays Full Report Following 'Security Incident' Mitarontonda, chairman and CEO of the activist investment fund, has pushed for change at Victoria's Secret before. Last time he was able to get on the inside through a consulting agreement with the company that lasted from 2019 until Victoria's Secret was set up as an independent company in 2021. But in an open letter to the retailer's chairperson, Donna James, Mitarontonda had a long list of complaints and pointed to a 57.2 percent stock decline since the spin off. In addition to the $2.4 billion in market capitalization lost since the public listing, Mitarontonda highlighted: Declines in revenue and gross margins and increases in inventory that 'reflect deep-rooted operational and strategic shortcomings.' Senior management turnover and a lack of marketing and merchandising focus. Super's 'limited chief executive and public company experience.' And her focus on relaunching Pink and expanding into athletic wear 'while failing to prioritize the company's core business and international growth.' Victoria's Secret's focus has shifted in recent years. The brand was long known for its overt sexiness and televised runway shows, but suddenly found itself on the outs and criticized for catering to the male gaze as cultural sentiment shifted. Now Victoria's Secret, which relaunched its runway show last year with women at the helm, is feeling its way forward and trying to find the right balance for the business. 'We believe that the company's attempt to simultaneously embrace disparate cultural narratives has resulted in a diluted brand identity, while its core business — Victoria's Secret's leading bra and intimate apparel franchise — has suffered from seeming inattention and mismanagement,' Mitarontonda said. He said the company should be 'reestablishing merchandising discipline, launching bold, exciting and imaginative marketing campaigns, and, where appropriate, reintroducing successful legacy elements, such as the iconic Angels campaign.' The activist called for the company to consider replacing most or all of its board members. Already, Victoria's Secret's board was under the investor microscope. Australian entrepreneur Brett Blundy's BBRC has a 12.9 percent stake in the company and has grown increasingly vocal about the business. The board has sought to keep BBRC at bay, installing a poison pill shareholder rights plan to prevent the retailer from being bought on the open market without the buyer negotiating a control premium with management. But Mitarontonda called the poison pill 'a step in the wrong direction' and said it could 'deter potentially value-enhancing proposals.' 'The company still maintains an 18.3 percent share of the North American market for women's underwear and nightwear and the Victoria's Secret brand has endured across generations, with significant loyalty among younger consumers and an impressive online following,' the activist said. Those strengths aren't necessarily valued on Wall Street where the company has a market cap of under $1.5 billion despite annual revenues of more than $6.2 billion. Investors seemed to like the idea that Barington — a veteran of many retail activist campaigns — is pushing Victoria's Secret to sharpen its business. Shares of the company increased 2.9 percent to $18.73 in midday trading Monday. But Mitarontonda sees much more there that the market's missing. 'We estimate the value of Victoria's Secret beauty business at $17 to $20 per share, based on wholesale revenue of approximately $700 million, peer enterprise value to revenue multiples of 1.9 to 2.4-times, and 79.8 million fully diluted shares outstanding,' he said. Best of WWD Harvey Nichols Sees Sales Dip, Losses Widen in Year Marred by Closures Nike Logs $1.3 Billion Profit, But Supply Chain Issues Persist Zegna Shares Start Trading on New York Stock Exchange Sign in to access your portfolio
Yahoo
16-06-2025
- Business
- Yahoo
VSCO rises on report activist investor Barington Capital Group has built a stake
-- Victoria's Secret shares are trading over 3% higher premarket on Monday after the Wall Street Journal reported that activist investor Barington Capital Group has taken a stake in the lingerie retailer. According to the Wall Street Journal, Barington owns more than 1% of Victoria's Secret and plans to continue building its position. The firm reportedly believes the company hasn't lived up to its potential since separating from Bath & Body Works (NYSE:BBWI) in 2021, when it was valued at over $6.5 billion. Its market cap has since dropped to about $1.5 billion. Barington reportedly intends to push for significant changes, including a board overhaul and a renewed focus on Victoria's Secret's core bra business, said the WSJ. The firm also believes the retailer's beauty segment could be worth as much as the company's current market value. The article notes that Barington views current CEO Hillary Super and the board as lacking the necessary experience and strategic clarity to drive a turnaround. It plans to ask the company to consider replacing a majority, or all of its board, with new independent directors, according to the WSJ. Victoria's Secret, already under pressure from major shareholder Brett Blundy, recently adopted a so-called poison pill to fend off takeover efforts. Barington reportedly views the measure as counterproductive and plans to urge its repeal. A spokesperson told the WSJ that while the company had not yet heard from Barington, it looked forward to engagement and remained confident in its strategy under Super's leadership. Related articles VSCO rises on report activist investor Barington Capital Group has built a stake Is the market overreacting to the Middle East crisis? UBS weighs in Trump's sons launch mobile service offering unlimited plan at $47.45
