New Body Shop owner ‘plans administration of UK chain’

​Aurelius has only owned The Body Shop for a few weeks but it’s reportedly lining up administrators for the UK retail arm of the business, which means store closures and job losses are likely.

That’s according to a Sky News report that said it has learnt the firm is preparing to appoint FRP Advisory to handle an insolvency process for the UK operation that runs over 200 stores.

It cited “City sources” saying a “significant chunk” of the UK stores could be shut, but didn’t comment on numbers of stores that might be closed nor on whether it would mean job losses at the firm’s HQ, which is in London. 

An “insider” also told Sky any administration process wouldn’t impact the brand’s global franchise partners.

It had previously been reported by Retail Week that Aurelius, the Germany-based private equity firm that bought The Body Shop from Brazil’s Natura &Co for £207 million in November, had signed an agreement with an unnamed “international family office to sell its business in most of mainland Europe and in parts of Asia”.

So where does this leave a business that several previous owners — including L’Oréal as well as Natura — had been trying to turn around for some time?

Back with the latest Sky report, it cited retail sources saying that after the international deal closed, Aurelius “concluded that the company had insufficient working capital and was trading more weakly than it had anticipated”.

It’s eventually likely to be a much slimmer business than it was but it’s currently unclear how many stores it might be left with. When Aurelius took over, The Body Shop employed around 10,000 people, and operated around 3,000 stores in 70 countries.

The new owner reportedly beat other bidders including Alteri Investors, Epiris and Elliott Advisors to win The Body Shop and seems to be laser-focused on profitability with a slimmed-down operation more likely to achieve that.

Profitable growth has been an elusive target for The Body Shop for years and the ‘small’ £207 million Aurelius paid for such a large chain is a stark contrast to the roughly $1 billion price L’Oréal reportedly paid in 2017. This underlined the problems it has faced.

Neither Aurelius nor The Body Shop have commented on the story, nor on another report from Retail Week that Natura’s legal counsel has written to Aurelius about unpaid long-term incentive grants worth up to £3 million owed to former employees as part of their severance.