- By Darbail Jordan
- Business reporter, BBC News
The Body Shop’s UK business is set to appoint administrators this week, in a move that is likely to result in store closures and job losses.
The owner of the company, founded in 1976 by the late Dame Anita Roddick, is expected to appoint experts to significantly restructure the retailer.
The Body Shop was acquired by private equity firm Aurelius just a few weeks ago.
It is understood that trading during the key period of Christmas and in January was not as strong as hoped.
It also emerged that the Body Shop had insufficient working capital.
The British retailer’s business has more than 200 stores 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 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 property and rents, as well as increasing its online presence.
There are hopes it will restructure 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 known for its business ethics and its stance against testing beauty products on animals. It started from a single shop in Brighton in the 1970s and grew under Dame Anita and her husband Gordon Roddick.
Its campaign won legions of shoppers, especially teenagers, and led to a significant period of expansion, with stores selling popular products such as its White Musk fragrance, hemp hand cream and various body butters.
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 her ethical values.
L’Oreal then sold the firm to Brazilian beauty giant Natura in 2017 for £880 million. It changed hands again late last year when Aurelius bought 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 production to the Philippines, which meant better profit margins and “discount retailers to generate sales”.
But Mr Constantine, who was a key supplier to the Body Shop for years with his previous business, said: “You can’t discount everything, take away value and make more profit without customers noticing and going elsewhere.”
He told the newspaper: “They lost that feeling when they bought a Body Shop product – that you were helping to change the world.”
When Aurelius bought the Body Shop, it said it wanted to revitalize the business and build its brand name.
He said that “despite the challenging retail market, there is an opportunity to re-energize the business to enable it to capitalize on 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 around 3,000 stores in more than 70 countries.
But in January, the Body Shop said it was selling its business in most of continental Europe and parts of Asia.
At the time, she told Retail Week: “This further prioritizes The Body Shop’s strategically important markets and global franchise partner relationships, which it will seek opportunities to build on.
“The Body Shop will also focus on reaching customers more effectively by strengthening digital platforms, developing new sales channels and through differentiated retail experiences.”