The Body Shop confronts closures beyond the UK, employee layoffs and an excess of beauty ingredients after being sold to Aurelius in November, coupled with the recent administration filing of its UK arm.
The Body Shop’s fair trade suppliers, working with people from the Amazon and Africa, say they have over US$1 million worth of beauty ingredients that may never be ordered or paid for.
Recent reports reveal The Body Shop will shut up to half of its 198 stores in the UK and cut the size of its head office, incurring hundreds of job losses. According to the firm overseeing the restructuring of the beauty retailer, closures will begin this Tuesday.
Additionally, The Guardian asserts the Body Shop’s German stores are beginning to close down, a process that will reportedly soon continue in Belgium.
Natura &Co agreed to sell The Body Shop to the international private equity group Aurelius for £207 million (US$261 million). The value falls short of the £880 million (US$1.1 billion) that Natura &Co paid L’Oréal to buy the retailer in September 2017.
Beauty ingredient surplus
The Body Shop operates 18 community fair trade partnerships worldwide. Several suppliers told The Guardian they could be left with hundreds of thousands of dollars of stock if the business goes bankrupt. This money is said to be “very meaningful” to families working for the suppliers and living on low incomes in remote areas.
The suppliers said they had no written contract with The Body Shop but had produced an agreed amount of product for the brand for many years.
Most of the fair trade community projects do not directly supply the business but sell the ingredients to intermediaries such as oil refiners or one of the group’s more than 20 cosmetics and beauty product manufacturers.
The producers are concerned that they will not be paid if administrators do not pay manufacturers.
Store and staff cuts
The beauty retailer employs approximately 2,200 people in the UK, including 750 staff at its head office. The administrators say the cuts would “help re-energize” the brand.
Four stores will be affected in London, where rents and other costs are the most expensive. The chain’s remaining shops and the website will trade as normal as the restructuring proceeds.
“It is expected that at the conclusion of the restructuring, more than half of The Body Shop’s 198 UK stores will remain open,” says the administrator, FRP Advisory.
Currently, The Body Shop’s global franchises in the Middle East, Asia and Africa are unaffected by closures. However, it is selling most of its businesses across Europe and in parts of Asia to an international family office.
The retailer recently told Retail Week it will prioritize its “strategically important markets and global head franchise partner relationships, which it will look for opportunities to build…The ambition is to create a modern and dynamic beauty brand relevant to customers and able to compete for the long term.”
The BBC reports that consumer expert Kate Hardcastle, who spent time with The Body Shop founder Dame Anita Roddick, said the closures were a stark reminder of the current “volatile” retail landscape.
“However, relevance is equally crucial. A brand must evolve with its audience. The challenge lies in upholding these values and communicating them effectively to a generation that demands authenticity and action,” she highlights.
Staff said they would have to apply to the government-backed Redundancy Payments Service for their payoffs, with some having spent decades in the ethical business.
“It’s a shocking way to treat people,” one insider told The Guardian.
German and Belgian shutdowns
Reports say staff from The Body Shop were told that more than 60 stores and the head office in Germany, where the business employs approximately 400 people, were likely to close. An insolvency specialist, Dr. Biner Bähr, at the White & Case law firm, has been appointed to handle the German business.
Workers in Belgium, where the chain has approximately 16 stores and 50 employees, are also reported to have been told that administrators were to be appointed.
Sources tell The Guardian that The Body Shop’s operations in Ireland, Austria and Luxembourg, which together have about 20 stores and more than 100 staff, are also expected to be put into administration shortly. The Austrian and French websites were not operating last Friday.
By Sabine Waldeck
Source: personalcareinsights.com
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