The Body Shop appoints administrators for UK business

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

The retailer, which has about 200 shops in Britain, has appointed FRP Advisory to oversee the administration, during which time the company will continue to trade as normal.

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

The decision to appoint administrators was taken after Aurelius, The Body Shop’s private equity owners, concluded that the company had insufficient working capital after trading poorly in recent weeks.

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

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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 that argued that business could be a force for good.

Brazilian company Natura paid €1bn to acquire the business from L’Oréal in 2017. It subsequently admitted it lacked the “retail expertise” to return it to its former glory across the globe — the brand has about 2,500 shops in more than 70 countries.

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

“It’s quite unusual that new owners would go into administration only five weeks after the acquisition,” he said. “When there is an acquisition of this scale there is a massive amount of due diligence that takes place with many expensive advisory firms involved.”

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The UK business recorded a loss before tax of £71mn in 2022 on sales of £407mn, compared with £10mn of profit the previous year, according to its more recent UK filings. It employed about 2,500 staff during that year.

“The Body Shop has faced an extended period of financial challenges under past owners, coinciding with a difficult trading environment for the wider retail sector,” the administrators added on Tuesday.

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

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

“It’s not immediately clear whether they are looking to use the administration as a way to extract the valuable from the poor-performing parts of the business or whether this is seen as a way to walk away from the UK business altogether,” he added.

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Source: https://www.ft.com/content/43044b3a-00f5-45dc-b71a-e8a78afcc4d3