Dive Brief:
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The Body Shop has entered the administration process in the U.K., akin to Chapter 11 in the U.S., “to accelerate restructuring of UK business,” parent company Aurelius said on Tuesday. Consultants from business advisory firm FRP have been appointed Joint Administrators of the company, according to an emailed statement.
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The specialty beauty retailer “faced an extended period of financial challenges under past owners, coinciding with a difficult trading environment for the wider retail sector,” the company said. Private equity firm Aurelius bought it from Natura & Co. in November for more than $250 million.
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Stores and the beauty retailer’s website will continue to operate, and “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,” the company also said. The move applies only to the U.K. business and not global franchise partners.
Dive Insight:
The Body Shop’s future is uncertain, after years of struggles despite a thriving beauty market at its home base.
Brazilian beauty conglomerate Natura & Co. had acquired the retailer from L’Oréal in 2017, and last summer began to explore strategic alternatives for it, amid declining sales. But the tough retail environment cited by Aurelius has actually helped the beauty sector to some extent, according to GlobalData research. The U.K. health and beauty market rose more than 7% last year, as financially strapped consumers opened their wallets for relatively inexpensive indulgences, GlobalData found.
“However, while the likes of Boots and Superdrug have outperformed the market and taken advantage of this heightened demand, The Body Shop has lagged behind as its once clear brand stance has become lost,” GlobalData analyst Tash Van Boxel said in emailed comments.
From its founding in the 1970s, The Body Shop centered its brand on natural ingredients and environmental concerns, but those are increasingly table stakes in the sector, according to Van Boxel. The Ordinary is an example of a brand that, in addition to its clean beauty claims, touts scientific formulas and offers low price points, for example, she said.
In Tuesday’s statement, the company noted that it just closed the Avon-like The Body Shop at Home, which allowed individuals to sell products, and the business across most of Europe and in parts of Asia, adding that “focusing on the UK business is the next important step in The Body Shop’s restructuring.”
