The once iconic beauty retailer was founded in 1976 by Dame Anita Roddick. It was an early ethical trading business and was best known for its refusal to allow product testing on animals.
The Body Shop has gone into administration in the UK, less than three months after German private equity firm Aurelius bought it for around £207 million. The decision reportedly followed disappointing Christmas and festive sales.
The move is expected to leave up to 2,000 jobs and 100 stores at risk, in order to compete more efficiently with competitors such as Lush, which caters to a younger market. However, the company’s international franchises are not expected to be affected.
Founded in 1976 in Brighton, by the late Dame Anita Roddick, the beauty retailer is now headquartered in London, with about 200 stores across the UK. Over the years, it has grown into an international brand taking a firm stance for ethical trading and denouncing animal testing.
Apart from Aurelius, the company had also received offers of acquisition from other private equity firms such as Epiris, bookshop Waterstones’ owner Eliott Advisors and Alteri Investors. When it was taken over, The Body Shop operated in about 70 countries, with approximately 3,000 shops and 10,000 employees.
FRP Advisory called in for restructuring process
The Body Shop has appointed FRP Advisory for the restructuring process, which is expected to find a way to slash costs significantly, especially on rent and property prices. FRP will also try to keep the company going in a more competitive and cost-efficient way, so that the brand can still resonate with clients in the long-term.
The Body Shop said in a statement, reported by Sky News: “Administrators will now consider all options to find a way forward for the business and will update creditors and employees in due course.”
The company also reassured customers that stores would continue to be open during this process, “ensuring customers will be able to continue to shop in-store and online for their favourite products”.
Why is The Body Shop struggling?
The Body Shop has floundered in recent years, changing hands a number of times, having been previously owned by beauty giant L’Oreal and Brazilian cosmetics chain Natura.
Following Aurelius’ takeover, reports suggested that the private equity group decided the Body Shop did not have as much working capital as expected and may have been in worse shape than previously thought.
This led to the company also making the decision to shut down its Body Shop at Home arm, which was not doing well.
Old rivals such as L’Occitane and newer competitors such as Lush and Bath and Body Works, which also stand against animal testing and focus on sustainability, have undermined Body Shop in the UK market.
The company has also revealed it will be focusing more on digital marketing and various sales channels during its restructuring process in order to capture a larger segment of the younger population.