The Body Shop prepares to slash jobs and close stores as administration confirmed
Hundreds of jobs are expected to be lost and stores closed as The Body Shop officially entered administration.
Tony Wright, Geoff Rowley, and Alastair Massey of business advisory firm FRP have been appointed as joint administrators of The Body Shop International Limited after reports first emerged on Friday evening that the move was imminent.
FRP said that the administration process only relates to The Body Shop’s UK operations.
In a statement, FRP said: “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.
“The joint administrators will now consider all options to find a way forward for the business and will update creditors and employees in due course.
“The Body Shop remains guided by its ambition to be a modern, dynamic beauty brand, relevant to customers and able to compete for the long term. Creating a more nimble and financially stable UK business, is an important step in achieving this.
“The joint administrators will continue to trade the business in administration, ensuring customers will be able to continue to shop in store and online for their favourite products.
“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.
“Having taken swift action in the last month, including closing down The Body Shop At Home and selling its business across most of Europe and in parts of Asia, focusing on the UK business is the next important step in The Body Shop’s restructuring.”
The Body Shop was established by the late Dame Anita Roddick in 1976 and was recently bought by private equity firm Aurelius. The retailer has more than 200 shops in the UK and is headquartered in London.
It started out as a single shop in Brighton and has become well-known for its ethical trading stance as well as being against testing beauty products on animals.
Dame Anita sold the company to French beauty giant L’Oreal for £652m in 2006 ahead of her death in the following year.
According to its website, the business employs 10,000 people as well as 12,000 through franchises. It also says operates in around 3,000 stores in over 70 countries.
Its current owner, Aurelius, acquired Greater Manchester-headquartered Footasylum from JD Sports for almost £40m in August 2022.
In response to the news Tim Symes, partner in the insolvency and asset recovery team at law firm Stewarts, said: “This could be a tactical administration appointment designed to shed creditors and cut costs following the purchase by new owners just before Christmas, or the directors simply had no choice.
“Putting the business through administration will give immediate respite from creditors and allow a leaner, viable business to emerge, albeit with substantial creditor casualties in the form of suppliers and landlords.
“As with Wilko, the business left standing is likely to be focussed on its online offering.”
Matthew Padian, partner at law firm Stevens & Bolton, said: “The scale of the restructuring embarked upon by Aurelius is quite surprising.
“It’s not immediately clear whether they are looking to use the administration of the UK business 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.
“It’s clear that the fortunes of the UK retail sector remain very much in the balance. Rising costs and subdued consumer demand remain a common theme.
“Yet, the pendulum seems to be swinging back in favour of brick-and-mortar retailers, with the number of internet-only retail failures rising sharply in recent months and online-only retailers having to open physical stores to stay relevant to consumers.
“What fate awaits the UK portfolio of The Body Shop stores remains to be seen. Surviving stores will need to think carefully about how they might reposition themselves.
“Cruelty-free cosmetics is not the niche it once was, and it seems possible that The Body Shop might just be another Wilko, namely a business with a strong history, which has failed to keep pace with the demands of the modern and arguably fickle consumer.
“There is no one size fits all answer for struggling retailers. The difficulties experienced by the likes of The Body Shop and Superdry illustrate that there are some high streets which are worth sticking with, and others where footfall just isn’t strong enough to sustain a long-term business.”