May 22, 2024

The Body Shop is recruiting for Directors for its UK business

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The Body Shop has appointed directors for its UK arm, three months after new private equity owners took control of the company in a £207m deal.

The retailer, which has around 200 stores in Britain, has appointed consultancy FRP to oversee management, during which time the company will continue trading as usual.

“Taking this approach provides the stability, flexibility and security to find the best means of securing the future of The Body Shop and revitalizing this iconic British brand,” FRP said in a statement on Tuesday.

The decision to appoint administrators was taken after Aurelius, the private equity owners of The Body Shop, concluded that the company did not have sufficient working capital following poor trading in recent weeks.

The retailer also closed its The Body Shop At Home service, which allowed consultants to sell products remotely, and sold its business in most of Europe and parts of Asia to an unnamed family office.

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.

Brazilian company Natura paid €1 billion to acquire the company from L'Oréal in 2017. It later admitted it lacked the “retail expertise” to return it to its former glory Worldwide – the brand has around 2,500 stores in more than 70 countries .

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David Boynton, who ran The Body Shop until last April, told the BBC on Monday that the timing of the administration “surprised a huge number of people in the financial community”.

“It is unusual for new owners to go into judicial administration just five weeks after a takeover,” he said. “When there is an acquisition of this size, there is a tremendous amount of due diligence that takes place with many expensive consulting firms involved.”

The UK company recorded a pre-tax loss of £71 million in 2022 on sales of £407 million, compared with a profit of £10 million the previous year, according to its latest UK filing. It employed about 2,500 employees during that year.

“The Body Shop faced a prolonged period of financial challenges under the previous owners, coinciding with a difficult trading environment for the broader retail sector,” officials added on Tuesday.

The insolvency process relates to UK businesses only and does not affect global franchise partners. Aurelius declined to comment further.

Matthew Badian, a partner at law firm Stevens & Bolton, said the scale of the restructuring undertaken by Aurelius was “quite surprising”.

He added: “It is not immediately clear whether they are looking to use the administration as a means of extracting value from underperforming parts of the company or whether this is seen as a way to move away from the UK business altogether.”