Body Shop set to officials in the UK
- By Darbil Jordan
- Business correspondent, BBC News
The Body Shop UK is set to appoint directors this week, in a move likely to lead to store closures and job losses.
The owner of the company, which was founded by the late Anita Roddick in 1976, is expected to hire experts to significantly restructure the retailer.
The Body Shop was purchased 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 expected.
It was also found that the body shop did not have sufficient working capital.
The British retailer business has more than 200 stores in the UK as well as its headquarters in London. The Body Shop also employs a large number of staff.
Restructuring expert FRP Advisory is likely to be appointed as administrator in the coming days.
It is highly unlikely that the Body Shop brand will disappear completely from Britain’s high streets. But there will be a focus on reducing its costs, including real estate and rental costs, as well as strengthening its online presence.
There are hopes of restructuring it to better compete with brands such as Lush, perhaps best known for its bath bombs, which are popular with younger shoppers.
The Body Shop has changed hands three times since it was sold by its founder Dame Anita in 2006, shortly before her death the following year.
The company has become known for its ethical business ethics and stance against testing beauty products on animals. The company started from a single store in Brighton in the 1970s and has grown under the leadership of Dame Anita and her husband, Gordon Roddick.
Its campaign attracted hordes of shoppers, especially teenagers, and led to a significant period of expansion, with stores selling popular products such as white musk perfume, hemp hand cream, and various body butters.
But some loyal customers saw Ms Anita’s decision to sell the company to L’Oréal, the French beauty giant, for £652m, as a betrayal of her ethical values.
L’Oréal then sold the company to Brazilian beauty giant Natura in 2017 for £880m. It changed hands again late last year when Aurelius acquired the company for £207m.
Under L’Oréal’s ownership, the Body Shop has moved manufacturing to the Philippines which means better profit margins and “marketers discounting to create sales,” Lush co-founder and CEO Mark Constantine told the Sunday Times.
But Constantine, who was a major supplier to The Body Shop for years under his previous job, said: “You can’t lower the price of everything, remove values, and make more profit without customers noticing and going elsewhere.”
“They’ve lost that feeling you get when you buy a Body Shop product, which is that you’re helping to change the world,” he told the newspaper.
When Aurelius bought The Body Shop, she said she wanted to revitalize the business and build on her brand name.
“Despite the challenges facing the retail market, there is an opportunity to revitalize the business to enable it to capitalize on positive trends in the high-growth beauty market,” she said.
The Body Shop says on its website that it employs 10,000 people in addition to another 12,000 employees through franchises. It adds that it operates in about 3,000 stores in more than 70 countries.
But in January, The Body Shop said it was selling its business across most of mainland Europe and parts of Asia.
At the time, she told Retail Week: “This also prioritizes The Body Shop’s strategically important markets and global franchise partner relationships, which it will look for opportunities to build.
“The Body Shop will also focus on reaching customers more effectively by enhancing digital platforms, developing new sales channels, and across diverse retail experiences.”