Victoria's Secret's Valuation Crisis: Can Activists Save a Fallen Icon?

Victoria's Secret & Co. (VSCO) has become the poster child for retail mismanagement. Once synonymous with lingerie dominance and a $76-per-share IPO high in 2021, its stock now trades at $18.83—a 75% collapse that has wiped out $2.4 billion in shareholder value. Behind this decline lies a toxic mix of strategic missteps, boardroom inertia, and now a full-blown war between management and activists. The question is: Can pressure from investors like Barington Capital and BBRC International force a turnaround—or is VSCO's brand too far gone?

The Core Business Struggles

Victoria's Secret's decline starts with its core business: bras and lingerie. Despite CEO Hillary Super's emphasis on “Path to Potential,” Q1 2025 results revealed a 1% comparable sales decline in stores and direct sales, while international sales grew only 9.3%—a tepid pace given the underpenetrated markets in Asia and Europe. The company's pivot to secondary brands like PINK and athleticwear has backfired. Barington Capital argues this dilutes focus on its signature categories, while BBRC International complains of capital misallocation, citing a $625 million buyback at peak prices and a $591 million acquisition of Adore Me that delivered little return.

Meanwhile, operational weaknesses persist. Gross margins remain under pressure, and inventory levels are bloated, reflecting poor demand forecasting. A May 2024 cybersecurity incident further disrupted digital sales, a critical channel for growth. With the company's stock trading at just 2.6x its 2025 adjusted EBITDA guidance, the market has already priced in failure—unless something changes.

Activist Investors on the March

Activists are now the last hope for shareholders. Barington Capital, which owns over 1% of VSCO and has a 38% average return in activist campaigns, has launched a scathing critique of the board and CEO. Its June 2025 letter demanded a board overhaul, citing six directors who've been in place since the 2021 IPO and “lack of expertise in brand revitalization.” It also accused Super of lacking public company leadership experience and criticized her focus on non-core initiatives.

The firm's most pointed argument: VSCO's shareholder rights plan (a “poison pill”) is entrenching underperforming leadership. This plan, triggered at 15% ownership, has blocked BBRC International—a 12.9%-stake investor—from increasing its holdings. BBRC, which views the board as “irredeemably ineffective,” has gone public with its demands, including replacing Chair Donna James and halting the poison pill.

The tension is existential. BBRC could push for a proxy fight or a hostile bid if negotiations fail, while Barington's leverage lies in its track record: it helped L Brands (now Bath & Body Works) nearly triple its stock price as a special advisor.

Can a Turnaround Be Forged?

The path to recovery hinges on three pillars:

1. Strategic Refocus: End the experiments with athleticwear and PINK's standalone stores. Reinvest in core lingerie and beauty segments, which contributed 60% of revenue in 2024. Reviving the Angels campaign—a nostalgia-driven move—could re-ignite brand equity.

2. Global Expansion: Asia-Pacific sales grew 15% in 2024 but remain just 14% of total revenue. Doubling down on partnerships with local retailers and digital channels (e.g., Alibaba's Tmall) could unlock growth.

3. Governance Overhaul: Replace board members with consumer-goods veterans who've turned around brands like Walmart's Sam's Club or LVMH's fashion divisions. A new CEO with public company experience—perhaps from a firm like Tapestry or L Brands—would signal seriousness.

Even with these steps, risks loom. Supply chain disruptions, rising labor costs, and a weak retail environment (especially in discretionary spending) could stifle progress. The poison pill remains a double-edged sword: it protects against BBRC's hostile takeover but also shields the current board from accountability.

The Bottom Line for Investors

VSCO's valuation is a paradox. At a $1.5 billion market cap, it's dirt-cheap relative to its $6.2 billion revenue run rate. But cheapness doesn't guarantee a rebound if the business model is broken.

Bull Case (30%+ Upside): If activists force a board reshuffle and strategic pivot to core strengths, VSCO could stabilize margins, revive international sales, and see its stock rebound to $25–$30.

Bear Case (Further Decline): If the board resists change, activist campaigns fail, and operational execution falters, the stock could test $10 as the brand's relevance fades further.

The catalyst is clear: VSCO's Q3 2025 earnings and shareholder updates will reveal whether governance changes are coming. Until then, the stock remains a high-risk bet for activists, not passive investors.

In short, Victoria's Secret is a cautionary tale of overreach and undermanagement. Its survival now depends on whether outsiders can force the company to remember what made it great—or if its once-iconic brand is destined for the discount rack.