Dan Loeb, a billionaire, hedge-fund owner and activist investor, will try to win seats on the board of troubled retailer Bath & Body Works (NYSE:BBWI). His hedge fund disclosed this information late yesterday. BBWI stock is falling 7% in early trading after climbing 2.8% yesterday.
Bath & Body Works is a retailer specializing in soaps and perfumes. In December, Loeb’s hedge fund, Third Point, reported that it had acquired a 6% stake in the company. Third Point reports that it has about $13 billion of assets under management.
Third Point’s Stance on BBWI Stock
A letter Loeb sent to Bath & Body Works’ board stated that Third Point had “identified numerous issues” with the board’s “oversight of executive compensation, succession planning, capital allocation, investor communication, and strategy for enduring value creation.”
Loeb praised Bath & Body Works’ chair, Sarah Nash, for taking several positive steps, including appointing the former head of McDonald’s (NYSE:MCD) digital operations, Lucy Brady, to the board. Further, the hedge fund stated that BBWI’s new CEO, Gina Boswell, “seems to have ‘hit the ground running’” and is tackling important matters that were previously ignored by the retailer.
However, Loeb also criticized Nash for being overcompensated both as chairman and as interim CEO before Boswell was hired last year. Furthermore, he stated that Nash made poor decisions as interim CEO.
Additionally, Loeb criticized the board for exercising bad timing when it came to buying back shares of BBWI stock. He also reported that Nash currently would not agree to place a candidate on the board that he supported.
Warning that the board’s culture would not change with the addition of Brady and one other member, Loeb stated that he has “no choice” but to try to win seats on the board.
“We believe that our slate will bring a breadth of talent to support long-term growth and sustained share price appreciation at Bath & Body Works,” the hedge fund owner concluded.
Investors should try to determine the extent to which Loeb will be able to force the company to make changes — and if those changes will meaningfully boost its financial results.
On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
