Retail

Investor asks L Brands to separate Victoria's Secret, Bath & Body Works

Key Points
  • An investor in Victoria's Secret parent L Brands is asking the company to consider splitting fragrance and personal care shop Bath & Body Works from the lingerie chain.
  • Barington argues improved merchandising and updated branding would help the struggling Victoria's Secret brand.
  • L Brands said last month it plans to close roughly 53 of its stores in 2019.
A woman walks past a Victoria's Secret store in Midtown Manhattan, March 1, 2019 in New York City.
Drew Angerer | Getty Images

An investor in Victoria's Secret parent L Brands is asking the company to consider splitting fragrance and personal care shop Bath & Body Works from the lingerie chain.

The hedge fund Barington Capital sent a letter to L Bands Chairman and CEO Leslie Wexner on Tuesday. Its shares were trading up by more than 3 percent on Tuesday.

In the letter, Barington Capital argues that improved merchandising and fresh branding would help the struggling Victoria's Secret brand. The hedge fund says Victoria's Secret was late to the athleisure trend and missed the shift toward bralettes and sports bras.

"Victoria's Secret's brand image is starting to appear to many as being outdated and even a bit 'tone deaf' by failing to be aligned with women's evolving attitudes towards beauty, diversity and inclusion," Barington writes in the letter.

L Brands said last month it plans to close roughly 53 Victoria's Secret stores in 2019. Comparable store sales for Bath & Body Works, known for its scented lotions and candles, rose 12 percent in the fourth quarter of 2018.

The hedge fund said it is encouraged by Victoria's Secret's recent reentry to the swimwear category. The letter notes while the brand has improved diversity in its advertising campaigns, it still uses models that "depict a very narrow definition of beauty."

Barington also asked L Brands to make changes to its directors to improve the independence and diversity of its board.

In a statement, L Brands said it "welcomes open communications with our shareholders and values input that may advance our goal of enhancing shareholder value."

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Key Points
  • L Brands, owner of Victoria's Secret and Bath & Body Works, on Wednesday reports mixed results in the holiday quarter that sent shares of the company down more than 7 percent Thursday morning.
  • Same-store sales at its Victoria's Secret stores have struggled to keep up with changing tastes and new competition and fell 3 percent.
  • The company plans to close 53 Victoria's Secret stores this year.