L’Oreal mulls The Body Shop sale

Multinational cosmetics company L’Oreal is considering selling The Body Shop after lacklustre sales.

A Body Shop sale would likely raise about £852 million, about a decade after L’Oreal paid £650 million for the business.

Founded by Dame Anita Roddick and her husband Gordon in 1976, The Body Shop has grown to more than 3000 stores in 66 countries. The original concept was to create an ethical approach to cosmetics with fewer chemicals and no animal testing.

The body shop instore

Former Swarovski marketing executive James Shepherd was recently appointed retail operations director to help turn the struggling business around. Sales fell 3.2 per cent in the first half of 2016 and by 2.8 per cent in the third quarter. Another decline is expected to be reported when L’Oreal releases its results this month.

Nicholas Micallef, senior industry analyst – beauty and personal care with Euromonitor International, said a divestment was “unsurprising”.

“While the company’s numerous brands advanced ahead in its key four divisions, in particular, the Luxe, Active Cosmetics and Professional divisions, The Body Shop trailed behind.”

Sales in its UK home market have been flat but it is performing strongly in Asian markets such as India and Indonesia, where it achieved a double-digit growth from 2010 to 2015.

“As the French owner of a British brand, pulling the plug off the UK is probably too controversial, given The Body Shop’s British legacy,” says Micallef.

“Simultaneously, allocating greater resources to the brand in Asia may not be L’Oreal’s priority. The company’s focus is to conquer China, which has been doing successfully with Garnier, launching the Ultra Doux line in 2016.

“The Body Shop is better suited in the hands of a beauty player seeking a lower-cost debut in Asia, and can take on the British brand as a stepping stone into the region.”

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