The Body Shop announces UK administration, hundreds of jobs at risk

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The Body Shop has gone into administration after disappointing Christmas and festive sales.

ANNOUNCEMENT

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 holiday sales.

The move is expected to leave up to 2,000 jobs and 100 stores at risk, in order to compete more efficiently with rivals such as Lush, which targets 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 based in London, with around 200 stores across the UK. Over the years it has grown into an international brand that takes a firm stand in favor of ethical trade and denounces animal testing.

In addition to Aurelius, the company had also received takeover offers from other private equity firms such as Epiris, Eliott Advisors, owner of the Waterstones bookstore, and Alteri Investors. At the time of the acquisition, The Body Shop operated in approximately 70 countries, with approximately 3,000 stores and 10,000 employees.

FRP Advisory contacted for restructuring process

The Body Shop has engaged FRP Advisory with the restructuring process, which is expected to find a way to significantly reduce costs, especially on rents and property prices. FRP will also look to move the company forward in a more competitive and cost-efficient manner, so that the brand can still resonate with customers in the long term.

The Body Shop said in a statement reported by Sky News: “The administrators will now consider all options to find a way out for the business and will update creditors and employees in due course.”

The company also reassured customers that stores will continue to be open during this process, “ensuring that customers will be able to continue to purchase their favorite products in-store and online.”

Why is The Body Shop in trouble?

The Body Shop has failed in recent years, changing hands several times, having previously been owned by beauty giant L’Oreal and Brazilian cosmetics chain Natura.

Following the Aurelius acquisition, reports suggested that the private equity group had decided that Body Shop did not have as much working capital as expected and may be in worse shape than previously thought.

This also led to the company making the decision to close the Body Shop at Home division, which was not going well.

Old rivals such as L’Occitane and newer competitors such as Lush and Bath and Body Works, which also oppose animal testing and focus on sustainability, have weakened Body Shop in the UK market.

The company also revealed that it will focus more on digital marketing and various sales channels during its restructuring process in order to capture a larger segment of the younger population.

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