The new owners of The Body Shop are set to call in administrators for its UK operations just weeks after acquiring the ethical skincare and cosmetics retailer in a £207m deal.
At the end of last year, private equity firm Aurelius bought the company from Brazilian beauty group Natura &Co, which had acquired the business from L’Oréal in 2017. The move came after the UK-based beauty retailer had suffered declining sales in the last couple of years after facing increasing competition from rivals as sustainability and natural products became more mainstream.
The Body Shop operates around 3,000 stores in 70 countries, with recent reports suggesting that large parts of the business in mainland Europe and Asia are being sold off as part of wider turnaround plans being implemented by Aurelius
A report by Sky News on Saturday said the retailer, which has about 200 outlets in Britain, is poised to appoint administrators at FRP Advisory, in a move that could lead to closures and job losses.
City sources are quoted as saying that administrators would likely consider closing a significant chunk of The Body Shop’s UK estate in a bid to cut costs.
After taking control of the business, the new owner is said to have concluded that the company had insufficient working capital and trading was weaker than it had anticipated.
The company had already decided to close its ‘Body Shop at Home’ division.
The Sky News report noted that the insolvency process in the UK could allow a slimmer, more financially viable business to emerge.
Diane Wehrle, CEO of Rendle Intelligence and Insights, said any prospective shop closures would be “a serious blow to UK high streets”.
She added: “It’s likely that the focus moving forward will be geared much more to online, which will be better suited to what is now clearly a disparate customer base.”
NAM Implications:
- If only inevitabilities were all as easy to predict as The Body Shop (Release 2)…
- Cutting to fit is the only viable approach for businesses facing shrinking demand.
- Niche going mainstream changes everything.
- Now The Body Shop (Release 2) has to replace physical reach with virtual reach.
- Online-only beckons…
