Hope for Body Shop’s future as bosses hatch plan to save remaining stores
Administrators are pushing for an arrangement that would allow the retailer to pay back its debts over time.
The Body Shop’s administrators have come up with a plan that could help save the retailer’s remaining stores.
They are pushing for a company voluntary arrangement (CVA), which would allow the business to keep trading an pay off its debts over time.
The administrators said they had the backing of Aurelius, the business that bought the Body Shop less than four months ago.
They explained that the £600,000 the Body Shop owes employees for pay, pension contributions an holiday pay would be paid under the plan.
The Body Shop, founded by the late Dame Anita Roddick in Brighton in 1976, fell into administration in early February.
It was then announced that dozens of stores would close and hundreds of jobs lost.
The business had previously expected that it would need £63 million to continue trading, but it later had to revise this forecast to ‘in excess of £100 million’, a report sent from the administrators FRP Advisory to creditors showed.
That difference, coupled with The Body Shop’s ‘poor trading performance’ meant shareholders ‘could not commit to the required level of funding,’ the report explained.
Aurelius bought the chain in December from Natura & Co, a Brazilian company thought to have paid more than $1bn to buy it in 2017.
The Body Shop made its name selling cruelty-free fairtrade products.
But, according to FRP, by the late 1990s, the company was ‘no longer offering a distinctive product’ at an ‘agreeable’ price as other brands adopted similar policies and stricter laws came into force.
In 2006, the company was sold to cosmetics giant L’Oreal ‘who deviated from the core values that drove the brand’s earlier success,’ FRP said.
Natura bought the business in 2017 and ‘attempted to return … to its founding principles’.
But its efforts ultimately failed to attract enough customers.
By the time it was bought by Aurelius, the business had 197 shops in the UK, directly operated stores in 20 other countries and franchises in another 68 countries.
On February 20, FRP announced 329 redundancies at the Body Shop’s head office and distribution centres and the closure of seven stores, whose staff were made redundant.
On March 1, it added that a further 75 shops would close, with 425 staff being impacted.
But it said in the report that a CVA ‘can be achieved and is therefore being pursued’.
It said that Aurelius had indicated support for this and said it would not immediately demand back money it is owed by the Body Shop.
It added: ‘If this is not possible, the administrators will seek a sale of the business and assets.’
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