Will The Body Shop auction lead to store closures?

Administrators of the UK’s largest vegan beauty chain, The Body Shop have confirmed they will put the retailer up for auction after it became the latest high street brand to enter administration in mid-February.

The brand’s leadership had hoped that the company would be able to continue under a restructuring plan. But administrators at FRP Advisory, which has been overseeing The Body Shop since its collapse, confirmed this week that this would not be viable.

The Body Shop was first founded in 1976 by the late Dame Anita Roddick and her husband Gordon, who sold it to L’Oreal in 2006. It has changed hands four times since then. 

Most recently, it was sold to the investment firm Aurelius for just over £200m in 2023. This low price was due to a harsh retail landscape that has seen The Body Shop dwindle from roughly 3,000 stores across 66 countries in 2017, to approximately 100 UK outlets today.

Why is The Body Shop being auctioned off?

An auction was not the first choice for FRP Advisory. The firm had reportedly been trying to reach a Company Voluntary Agreement (CVA) with The Body Shop. 

Put simply, a CVA is essentially a repayment plan for companies facing insolvency and their creditors, or those it owes money to, to restructure its debt.

However, FRP Advisory has been unable to reach a CVA. This suggests the brand is in a severe financial situation that creditors do not believe it can recover from. 

This is supported by the administrators’ report, in which Aurelius refers to The Body Shop’s “short-term cash position [which] was adverse to that that had been forecast, driven by poor results in the 2023 financial year and the unwinding of the company’s working capital”.

By auctioning off the brand, Aurelius can attempt to recoup some of the chain’s value. This will involve selling off key assets – in The Body Shop’s case, that means its prime retail real estate, with outlets across many of the UK’s biggest towns and cities.

The auction won’t be like your typical Cash In The Attic episode, however. The Body Shop’s financial worries aside, the corporation’s price tag will still be in the millions. 

Other big-name brands that have been auctioned off include Jimmy Choo, which was sold to the US fashion brand Michael Kors in 2017 for £900m.

What does this mean for The Body Shop stores?

According to Sky News, administrators are hoping to close the sale of The Body Shop stores this summer. The auction could result in more store closures for the brand, which has almost halved its retail presence since it went into administration in February.

The chain has sold off around 98 UK stores so far this year, including the company’s flagship store on Oxford Street in central London. Overall, the closures led to around 489 job losses.

There are currently no plans to close the remaining 100 stores. However, their future will depend on how the auction is formatted.

If the winning bidder buys the entire retail chain, the remaining shops will likely remain open, pending any decisions by the new owners. However, if the stores are sold off individually, along with their inventory and fixtures, this would probably result in them being rebranded.

Given today’s dire high street, with footfall falling, there is also a risk that no bidders will express interest. In this unfortunate scenario, the stores would likely be closed permanently.

Who will buy The Body Shop?

The Body Shop has built up a loyal following thanks to its company values that rejected animal testing, a progressive stance during the 1970s and 80s. It has also cemented itself as an environmentally-friendly seller. 

Fans will now be eagerly waiting for news that a bid has been accepted. Among the parties that have expressed interest in buying The Body Shop is the major department store, Next.

FRP has expressed optimism it will find a buyer, stating it has been “encouraged by the level of interest received to date from interested parties” in a statement given last week. 

“The Body Shop remains an iconic brand and following the structural changes we have made to the business since our appointment we consider it has a viable future,” it added. “This will be showcased to potential acquirers during the sale process.”