The Body Shop set to appoint administrators in UK

1 week ago 16

The Body Shop branch on Oxford Street, LondonImage source, Getty Images

By Dearbail Jordan

Business reporter, BBC News

The Body Shop's UK business is set to appoint administrators this week, in a move likely to result in shop closures and job losses.

The owner of the company, set up in 1976 by the late Dame Anita Roddick, is expected to appoint experts to significantly restructure the retailer.

The Body Shop was bought by private equity firm Aurelius just weeks ago.

It is understood that trading over the key Christmas period and into January was not as strong as hoped.

It also emerged that the Body Shop had insufficient working capital.

The retailer's British business has more than 200 shops in the UK as well as its headquarters in London. The Body Shop also employs a significant number of staff.

Restructuring expert FRP Advisory is likely to be appointed as the administrator in the coming days.

It is highly unlikely that the Body Shop brand will completely disappear from Britain's High Streets. But there will be a focus on reducing its costs, including on property and rents, as well as building up its online presence.

There are hopes it will be restructured to better compete with brands such as Lush, perhaps best-known for its bath bombs, which is popular with younger shoppers.

The Body Shop has now changed hands three times since it was sold by founder Dame Anita in 2006, shortly before her death the following year.

The company became well-known for its ethical trading ethos and its stance against testing beauty products on animals. It began from a single shop in Brighton in the 1970s and grew under Dame Anita and her husband Gordon Roddick.

Its campaigning won legions of shoppers, especially teenagers, and led to a significant period of expansion, with shops selling popular products such as its White Musk fragrance, Hemp hand cream and various body butters.

Image source, Getty Images

Image caption,

Dame Anita Roddick started The Body Shop from a single shop in Brighton in the 1970s

But some loyal customers saw Dame Anita's decision to sell the company to L'Oreal, the French beauty giant, for £652m as a betrayal of its ethical values.

L'Oreal then sold the firm to Brazilian beauty giant Natura in 2017 for £880m. It changed hands again late last year when Aurelius acquired the company for £207m.

Mark Constantine, co-founder and chief executive of Lush, told the Sunday Times that under L'Oreal's ownership, the Body Shop had moved manufacturing to the Philippines which meant better profit margins and "marketeers discounted to create sales".

But Mr Constantine, who was a major supplier to the Body Shop for years under his previous business, said: "You can't cheapen everything, remove the values and take more profit without the customers noticing and going elsewhere."

He told the newspaper: "They lost that feeling one got when buying a Body Shop product - that you were helping to change the world."

When Aurelius bought the Body Shop, it said that it wanted to revitalise the business and build on its brand name.

It said that "despite the challenging retail market there is an opportunity to re-energise the business to enable it to take advantage of positive trends in the high-growth beauty market".

On its website, the Body Shop says it employs 10,000 people with a further 12,000 staff through franchises. It adds that it operates in around 3,000 stores in more than 70 countries.

But in January, the Body Shop said it was selling its business in most of mainland Europe and in parts of Asia.

At the time, it told Retail Week: "This further prioritises the Body Shop's strategically important markets and global head franchise partner relationships, which it will look for opportunities to build.

"The Body Shop will also focus on more effectively reaching customers by strengthening digital platforms, developing new sales channels, and via differentiated retail experiences."

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