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Next considers cosmetics chain rescue The Body Shop

  • Next considers buying Body Shop
  • FRP oversees insolvency process
  • Stores close, jobs cut

Administrators have been approached by the FTSE-100 fashion retailer and prolific acquirer of troubled high street chains about a potential transaction involving a portion of The Body Shop’s assets.

Subsequently, administrators of The Body Shop have been approached about a possible transaction to acquire components of the troubled cosmetics chain.

Executives of the retail giant in the United Kingdom have contacted FRP Advisory regarding their interest in acquiring assets should the company decide to initiate a sale process.

This weekend, however, there were scepticisms that FRP, appointed earlier this month to oversee the insolvency of The Body Shop in the United Kingdom, would opt for a traditional auction; one source speculated that negotiations between FRP and Next had already stalled.

Sources familiar with the FTSE-100 company say Next has been monitoring The Body Shop for some time and has now confirmed its interest in negotiating a transaction.

In recent years, the retailer, led by Lord Wolfson, has become one of the most active purchasers of troubled retail enterprises in the United Kingdom.

It has acquired brands including Made.com, an online furniture retailer, Joules, and Fat Face.

In addition to acquiring Cath Kidston and JoJo Maman Bebe, a retailer of maternity apparel, the company has formed partnerships with Gap and Victoria’s Secret.

The absence of consideration for The Body Shop’s brand and intellectual property (IP) assets during the administration process could be an obstacle to any potential agreement.

Aurelius, which has owned The Body Shop since January 1, is reportedly financing the remainder of the company, securing significant assets such as inventory and intellectual property.

FRP may decide within weeks whether to conduct an auction, at which point the restructured business could be sold back to Aurelius in its new guise.

Should Next decide to acquire the chain, it is unlikely to retain many of The Body Shop’s British locations, if any.

FRP announced the closure of nearly half of its 198 stores in the United Kingdom this week, with seven closing immediately.

In support of a streamlined business and the sale of loss-making businesses in parts of mainland Europe and Asia, The Body Shop will restructure head office positions, the administrators announced on Tuesday.

Due to the store closures and downsizing of its headquarters, which will leave approximately 400 employees, hundreds of positions will be lost.

FRP stated, “This swift action will help revitalise the renowned brand of The Body Shop and provide it with the best foundation to realise its aspiration of becoming a contemporary, dynamic beauty brand capable of regaining profitability and sustaining long-term competition.”

The impending appointment of administrators by Aurelius sparked a heated debate about the reasons behind the failure of the brand founded by the late Dame Anita Roddick and her husband Gordon nearly half a century ago.

Late last year, Aurelius acquired the company from the Brazilian firm Natura and quickly realised it lacked adequate working capital and was performing worse than expected.

Mismanagement and Strategic Decline

A retail executive commented that Natura should address significant issues, stating, “This organisation has been mismanaged and underinvested in for years, not just in the last six weeks.”

Following the company’s acquisition by Aurelius for a purported value of £207 million, the majority of The Body Shop’s operations in Europe and parts of Asia have been transferred to a family office.

At the time of the transaction, The Body Shop employed approximately 10,000 people and operated 3,000 stores in 70 countries.

Despite years of challenging profitability, the company has maintained a significant high street presence in the United Kingdom.

The Roddicks established a competitive edge over other retailers in the 1980s and 1990s through their conspicuous advocacy for environmental causes.

Additionally, its opposition to cosmetic animal testing was unprecedented in the decades following its inception.

However, in recent years, its uniqueness has been eroded by competitors that have similarly prioritised sustainability while more effectively targeting younger consumers.

Dame Anita passed away in 2007.

In 2017, Natura reportedly paid over $1 billion to acquire The Body Shop.

Before its acquisition by Natura, the cosmetics behemoth L’Oreal had owned the brand.

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