Bath & Body Works Faces Growing Activist Pressure Despite Adding 2 Board Seats

Activist investor Daniel Loeb will launch a boardroom challenge against Bath & Body Works through his hedge fund Third Point. The retailer recently added two new directors in an effort to address Loeb’s concerns regarding the direction of the company, including how it is handling governance, capital allocation and executive pay, but the investor is seeking even more action. Third Point controls a 6% stake in Bath & Body Works.

Loeb has accused the Board of Directors of operating in “triage mode rather than via best corporate governance practices” as the retailer struggles with declining revenue. Bed Bath & Beyond reported net sales of $2.9 billion for Q4 2022, which ended Jan. 28, 2023, down 5% compared to Q4 2021. Net sales for fiscal 2022 decreased 4% year-over-year to $7.5 billion.

“The team delivered better-than-expected earnings results despite a challenging macroeconomic environment, which is a testament to the strengths of this organization,” said Gina Boswell, CEO of Bath & Body Works in a statement. “Our customer base responded well to our holiday season, in part powered by our loyalty program, which now exceeds 33 million members. In addition, we continued to be disciplined in our expense and inventory management.”

The retailer also has added two independent directors with the goal of appeasing Third Point, bringing the board’s total size to 12 members, 11 of whom are independent. Lucy Brady, President, Grocery & Snacks at Conagra Brands, was appointed following a recommendation by Loeb. Steve Voskuil, SVP and CFO at The Hershey Company, soon followed, but Loeb noted that while he “[recognizes] Mr. Voskuil’s financial experience, this board’s handpicked new director does not assuage our concerns about substantial corporate governance shortcomings.”


Additionally, Loeb noted that the board did not include a shareholder representative as he had requested. “As fiduciaries, we have no choice but to put forth qualified director candidates and give our fellow shareholders the opportunity to elect directors who can hold the stewards of their capital responsible for the decisions they make,” Loeb wrote in a letter to the company’s board.

In a statement released in response to Loeb, Bath & Body Works wrote that its board “strongly disagrees with the views expressed in Third Point’s letter.” However, the retailer also noted it would review and consider Third Point’s proposed board nominations.

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