Activist investor calls for changes at Victoria’s Secret; wants board overhaul
One of Victoria’s Secret & Co.’s biggest investors has called for a board overhaul in the wake of “consistently poor decisions” and a failure to “adequately demonstrate meaningful accountability.”
BBRC International sent a letter on June 9 to the lingerie giant’s board of directors calling out “dismal total stockholder returns” since it became an independent public company in 2021. It also called out “poorly timed share buybacks totaling $625 million at an average cost of $44.53 per share,” and the $591 million acquisition of Adore Me, which it said has has failed to generate meaningful returns.
“These weren’t market timing errors or mistakes due to poor execution but systematic failures of fiduciary duty and due diligence,” the letter stated.
The letter came several weeks after Victoria’s Secret adopted a limited-duration shareholder rights plan — or “poison pill” — to “protect the best interests” of all shareholders. The move came after BBRC International increased its stake in the company to 13%.
In its letter, BBRC, which expects the retailers to address its concerns at its earnings conference call on June 11, also said the board has not “strategically refreshed itself” in the wake of consistently poor decisions, and has has been unwilling to add anyone designated by a large stockholder. It noted that chair Donna James has served in a director capacity for Victoria’s Secret and its predecessor entity (L Brands Inc.) for more than 20 years.
“The board has fired executives for poor performance while never holding itself accountable for the strategic decisions that led to that poor performance,” the letter stated. “Every failed initiative — from the buyback program to Adore Me to the brand transformation — was board-approved, yet the directors remain in place.”
The letter also called out the recent cybersecurity incident that caused Victoria’s Secret to shut down its website for several days.
[READ MORE: Victoria’s Secret resumes e-commerce following security incident]
“While we recognize VS is working to recover from the recent cyber incident — an event that may have been preventable with proper precautions — we cannot remain silent in the face of continued
mismanagement,” the letter stated.
