Victoria’s Secret hired a superstar CEO to turn around the flagging brand. But a 50% stock drop has activist investors circling

As bras go, wireless is winning.

On Victoria’s Secret’s latest earnings call earlier this month, CEO Hillary Super explained that the brand’s So Obsessed underwire-free push-up bra was a fast-growing hit, calling it “a standout,” with 30% year-over-year growth and a “deep resonance with the millennial customer.”

Those comments landed well with Morgan Stanley analyst Alexandra Stratton, who wrote in a subsequent research note that Super seemed to have a better handle on fashion trends than the previous management team. “Super’s commentary demonstrated a deeper understanding of how the intimates industry has evolved in recent years,” she wrote. Several other analysts sprinkled their response to the earnings call with optimistic observations about Super, who has led the lingerie shop since last September and was hired to revamp a brand that has spent the past six years careening from one disaster to the next.

And yet the CEO is also contending with a host of problems. Like other retail leaders, Super is navigating Trump’s tariffs and uncertainty about consumer spending. The company’s stock is down 50% since January, following a December surge on signs of a turnaround. (The share price hovers at $20 at the time of writing, compared to $22 when she took over.) She’s also still reeling from the effects of a security breach last month that forced the company to shut down its website for three days. And worst of all, two activist investors—Australia’s Brett Blundy, the company’s largest shareholder, and hedge fund Barrington Capital—have the retailer in their crosshairs, and have called for an overhaul of its board. Barrington Capital also suggested in an open letter that a reconstituted board needed to evaluate whether Super was the right person for the CEO job.

In an email to Fortune, the lingerie company said: “The board has full confidence in Hillary’s vision, leadership, and her ability to unlock the potential of our iconic brands.”

Super has laid out a turnaround strategy that includes reasserting the brand’s authority in bras, and growing categories like youth-focused PINK, beauty, and sport, while reimagining the company’s marketing and sales strategy to better suit the way customers are shopping now.

But after a rollercoaster few years, Victoria’s Secret finds itself once again at a critical inflection point as it tries to reestablish its place in the wallets and boudoirs of American consumers.

Hillary Super’s arrival at Victoria’s Secret 10 months ago was met with enthusiasm from Wall Street. When the leadership change was announced in August, the company’s share price jumped 16%. The board poached Super from Rihanna’s Savage X Fenty, where she had been CEO for a year, offering her a compensation package that totalled $18 million for the year, including a signing bonus and a one-time award.

Super brought a certain cool factor thanks to her role at Fenty. She also brought vast experience, having spent more than three decades in retail leadership roles, including at Anthropologie, a cult-favorite label and subsidiary of Urban Outfitters, where she spent four years in top roles, including president and global CEO.

But with Victoria’s Secret, Super inherited a beleaguered brand stained by upheaval and scandal. In its mid-aughts heyday, the company reached a market share of over 30%,  and raked in around $8 billion in revenue in 2016 under CEO Sharen Turney. But Turney was dismissed in 2017 and replaced by L Brands owner Les Wexner. Under his leadership, and that of his chief lieutenant, longtime senior leader Ed Razek,  the company missed important retail trends like athleisure wear. Its marketing also fell out of step with major cultural shifts, and remained overtly sexual and at the height of the #MeToo movement.

Then, in 2019 and 2020, Victoria’s Secret became the focus of two scandals involving its male leadership. First, Wexner’s close relationship with late sex offender Jeffrey Epstein became a PR liability, along with reporting that Epstein posed as a scout for Victoria’s Secret to lure and abuse aspiring models. (Wexner has previously said that he is embarrassed by his ties to Epstein, whom he called “depraved.”) Then, in 2020, the New York Times published a bombshell investigative piece outlining allegations of sexual harassment at the company, specifically involving Rezek.

By that time, Victoria’s Secret’s entire ethos had largely fallen out of favor. L Brands decided to spin off the company, which it did in 2021, separating it from its former sister company, Bath & Body Works. (L Brands has since rebranded as Bath & Body Works.)

In 2020, Wexner, who purchased Victoria’s Secret in 1982 when it was a small chain of stores on the verge of bankruptcy, stepped down.

Once known for turbocharging the careers of models like Karlie Kloss and Heidi Klum, Victoria’s Secret went about trying to transform its reputation after Wexner’s exit. Under Martin Waters, who was named CEO of the spun-off company, the over-the-top fashion shows featuring diamond-studded fantasy bras were out, and the Victoria’s Secret Angels, a rotating group of It-girl models who had become synonymous with the label, were disbanded. Instead, the VS Collective, a group of brand ambassadors of various ethnicities and sizes, known for their careers in sports or technology, would become the face for the brand.

But while this top-to-bottom revamp sparked a conversation about feminism and the definition of “sexy,” it didn’t ignite much passion in consumers. The rebranding was deemed inauthentic by some critics, and an overcorrection by others. The company’s market share had fallen to 18.7% by 2022. The company changed strategies again while Waters was still in the corner office, and began reclaiming some of its supermodel history, hiring  Hailey Bieber and Emily Ratajkowski, and bringing back its fashion shows. In a letter about Waters’ departure, the board said he had “established a foundation for VS&Co to enter its next chapter.”

Super is now tasked with finding ways to thread the needle between Victoria’s Secret’s past and future. On the recent earnings call, the CEO said that she felt the company’s marketing had become “too serious” in recent seasons.

“We have an opportunity to have a more energetic, more joyful expression of VS,” she said.

But activists may put a dent in Super’s plans.

In March of this year, BBRC International Private, an investment company run by Australian billionaire Brett Blundy, increased its stake in Victoria’s Secret to about 13%, prompting the retailer to adopt a poison pill to ward off a potential takeover. On June 9, Blundy sent the Victoria’s Secret board a letter decrying its oversight of the retailer and its management team.

Just a week later, the New York-based hedge fund Barington Capital said it would add to its stake in Victoria’s Secret—it’s thought to have over 1% now, though the exact figure isn’t yet known—as it called for the company to overhaul its board, refocus on the brand’s core products, and drop the poison pill. “Since its spin-off and public listing in 2021, the company has lost over $2.4 billion in shareholder value,” Barington Capital chair and CEO James Mitarotonda wrote in an open letter to the board.

Neither Barington Capital nor Brett Blundy’s investment company responded to Fortune’s request for comment.

Both activist investors feel they know what Victoria’s Secret needs. Blundy, the Australian billionaire, has a history in the intimates business and has recently purchased another lingerie brand. His letter to the company called attention to a total stockholder return of -64% since 2021 and what it called “catastrophic” capital allocation, including the purchase of Adore Me in 2022, which “has failed to generate meaningful returns.”

Barington Capital, meanwhile, has already successfully advocated for changes at Victoria’s Secret once, just before it was spun out from L Brands. “The share price of L Brands increased by 221.5% during our tenure as an advisor to its board of directors,” Mitarotonda wrote in his open letter.

Given that Victoria’s Secret is one of the world’s most iconic brands, the letter said, “the company should be creating significant long-term value for its shareholders.”

“Victoria’s Secret has meaningfully underperformed its peers and the market as a whole since becoming an independent company,” the activist argued, pointing to lackluster growth. He also said Super lacked CEO experience, since her stint at Savage X Fenty only lasted for one year.

But Barington’s harshest criticisms were for the board and its chair, Donna James, a longtime director at Victoria’s Secret. The hedge fund believes the board has the wrong skill sets and needs refreshing. “Of the current nine directors,” it noted, “six have presided over the company’s decline since its public listing.”

Victoria’s Secret is pushing back against the activist’s claims, pointing to Super’s focus on bras, and steady improvements at the company, with momentum growing in its Pink brand, as well as its healthy and beauty division.

Although the company lowered its sales guidance for the second quarter when it announced its first quarter results earlier this month, it also reported earnings per share of 9 cents, beating market expectations of 4 cents. At $1.35 billion, sales were slightly ahead of analysts’ expectations, while the retailer also reduced its overall losses compared to the same period in the previous year.

A Wells Fargo analyst also heralded Super’s work at the company, noting that Victoria’s Secret saw improved performance in North American sales and PINK brands in the second half of last year, following her hiring. Bloomberg research predicts full-year sales would beat the company’s guidance and reach $6.2-$6.3 billion in the second half of this year. And a JPMorgan analyst defined the current moment as “early in the turnaround.”

Some retail-watchers appear ready to give Super the time to prove herself. In a LinkedIn post, Neil Saunders, a retail analyst and consultant, wrote: “Victoria’s Secret is mainly a brand for women. It was run by men for quite some time, and they ultimately made a hash of it.”

“Now Hillary Super is at the helm and is starting to reinvent things. She has been in post for less than a year and has to be given a chance to put her vision into practice. But the carping from activist investors has already begun,” he continued. “Activist investors are also mostly men. I honestly think that sometimes these finance men should sit down and take a seat, because they don’t really understand the women’s fashion business.”

Other defenders also question whether Super is being judged prematurely. Patricia Lizarraga, managing partner and chief investment officer of Hypatia Capital, which manages an exchange-traded fund invested in public companies run by women, says that she was “shocked” that activist pressures have arrived so quickly.

Then again, she notes, activist investors are more likely to go after women CEOs, according to studies. Interference from activists also appears to be one of many reasons that women have shorter tenures as CEOs. “We have some real superstars that have turned around fallen brands,” she said, pointing to CEOs like Fran Horowitz, who has led a revival of Abercrombie & Fitch. “There’s a model to follow.”

Super has recently hired new senior leaders, including a new chief marketing officer and a new creative director. On the latest earnings call, she referred to her leadership team as the “super squad,” quoting a fashion magazine’s play on her name.

Together, the squad will have to move as quickly as possible.

This story was originally featured on Fortune.com