May 22, 2024

The Body Shop has decided to appoint managers for its branch in the United Kingdom

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The Body Shop's new European private equity owners are set to recall directors of their UK business just weeks after changing ownership of the retailer in a £207m deal.

Aurelius, which also owns sportswear chain Footasylum and pharmacy Lloyds Pharmacy, bought the cosmetics brand from Brazilian company Natura & Co in November and took over operations at the start of the year.

A person familiar with Aurelius's thinking said the retailer, which has around 200 outlets in Britain, is preparing to appoint directors to FRP Advisory, in a move that could lead to closure and job losses. The move was first reported by Sky News.

Insolvency practitioners may seek to secure lower rents in an attempt to reduce a company's day-to-day costs, this person said.

The private equity firm concluded that the company did not have sufficient working capital and was trading weaker than it expected, and it intended to act quickly to put it on a firmer financial footing, the person added.

Diane Werle, chief executive of Rendle Intelligence and Insights, said any potential store closures would be a “serious blow to the UK's high streets”.

“The focus in the future will likely be more directed at online, which will be better suited to what is now clearly a disparate customer base,” she added.

The administrative process for the UK operations is not expected to impact the brand's global franchise partners.

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Aurelius, which has offices across Europe, specializes in buying and turning around unloved companies that have been spun out or companies experiencing operational difficulties.

It confirmed last month that it had signed an agreement with “an international family office to sell its business across most of continental Europe and in parts of Asia,” taking a “decisive step towards delivering a strong turnaround strategy.”

The confirmation came weeks after Aurelius announced it would seek to improve the performance of the company, which had struggled under previous ownership and had to compete with other companies to catch up on its once unique ethical mission. Natura paid €1 billion to acquire the company from L'Oréal in 2017.

Founded in 1976 by the late Anita Roddick and her husband, Gordon, The Body Shop was among the first companies to promote so-called ethical consumerism, which argued that business could be a force for good.

“The Body Shop is a company that many of us grew up with,” Tristan Nagler, a partner at Aurelius, told the Financial Times in November. “There is an opportunity to put it back on its feet and restore it to its former glory.”

Aurelius, The Body Shop and FRB declined to comment.