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Thousands of jobs at risk as The Body Shop enters administration

The British arm of The Body Shop has officially entered administration, casting uncertainty over 200 stores and jeopardising thousands of jobs.

The British arm of The Body Shop has officially entered administration, casting uncertainty over 200 stores and jeopardising thousands of jobs.

Founded by Dame Anita Roddick in 1976, the beauty retailer filed a notice of intent to appoint administrators on Monday after its new private equity owner discovered the business was in a far worse financial state than previously believed.

Administrators from FRP Advisory have been appointed by the company, tasked with exploring all options to chart a path forward for the business.

With approximately 200 stores across the UK, it is anticipated that up to 100 of these could be shut down to align with competitors such as Lush and L’Occitane. Additionally, several head-office positions are also at risk. The Body Shop employs around 10,000 staff globally, with approximately 2,000 in Britain.

FRP stated that the beauty business would continue to operate during administration, ensuring customers could still access their favourite products both in-store and online. The administration, they noted, offers stability, flexibility, and security to pursue the best course of action for The Body Shop and rejuvenate this iconic British brand.

The Body Shop has faced prolonged financial challenges under previous ownership, coinciding with a challenging retail environment. Aurelius, a German private equity firm, acquired The Body Shop from Natura, a Brazilian cosmetics group, in November last year. Recently, Aurelius divested the retailer’s loss-making operations across much of Europe and parts of Asia.

Upon completion of the acquisition in January, Aurelius expected the company to have more working capital than it actually possessed to sustain operations. However, it was discovered that the business had a bloated cost structure, coupled with weaker than forecasted trading over the Christmas period.

Sources suggest that Natura conducted an accelerated sale process, limiting Aurelius’ ability to conduct thorough due diligence on The Body Shop’s financial health. Consequently, once the acquisition was finalised, the private equity firm found it necessary to take more significant measures to address the challenges facing the struggling beauty retailer.

Mark Constantine, co-founder and chief executive of Lush, a rival ethical cosmetics group, remarked on The Body Shop’s transition to manufacturing in the Philippines, noting the company’s shift towards profit maximisation has been accompanied by compromised values. Constantine emphasised the importance of maintaining brand integrity, suggesting that consumers notice when values are compromised.

The Body Shop’s journey has been fraught with challenges, with its concept of “retailing with a conscience” losing some of its edge as competitors adopt similar messaging. Analysts believe that while The Body Shop continues to champion ethical and cruelty-free values, these have become industry standards, diluting the brand’s unique selling proposition.

Aurelius, renowned for rescuing struggling businesses, aims to revive The Body Shop’s fortunes through a leaner business structure and by enhancing its online presence. Moreover, there are plans to give the brand a millennial-friendly makeover in hopes of attracting a new generation of consumers.

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Thousands of jobs at risk as The Body Shop enters administration