Jones Day called in as Body Shop’s UK business goes into administration

Team led by London restructuring partner David Harding working with administrators FRP on possible rescue

Jones Day has been called in to act as the lead law firm on the administration of The Body Shop’s UK business.  

A cross-practice team led by London restructuring partner David Harding is working with administrators FRP Advisory to rescue the business, which employs more than 2,000 people in the UK and has around 200 shops across the UK and Ireland.  

The timing of the administration has surprised many in the financial industry, as it comes just a few months after private equity firm Aurelius agreed to buy The Body Shop from Brazilian business Natura & Co in a £207m deal that saw Jones Day and Cleary Gottlieb advise the respective parties.  

The decision to appoint administrators was made after Aurelius, which specialises in turning around failing businesses, decided the company had insufficient working capital after trading poorly over the past few months, according to the Financial Times.  

The Body Shop had made a profit of £10m in 2021 but reported pre-tax losses of £71m in 2022 after turnover fell almost £80m to £408m. 

Such a fate seemed impossible when L’Oréal agreed to pay £652m to buy the business in 2006. The cosmetics giant turned to Linklaters for counsel on the matter, while The Body Shop was repped by Baker McKenzie.  

Co-founders Anita and Gordon Roddick made a reported £130m in the sale, having begun the business in 1976 with a single shop in Brighton and expanding rapidly through a franchise model and a brand centred on ethical consumerism and natural products.  

The business was still solidly profitable when Natura bought it in 2017 for £880m, with Linklaters again advising L’Oréal, which was also represented by Baker McKenzie, and Natura repped by Davis Polk.  

However The Body Shop’s costly high street stores and its high-end ingredients sourced from a network of small producers saw it begin to buckle under challenging economic conditions. Inflation drove up costs and reduced customer spending power, and sales declined in the US market.  

Natura, which specialises in direct sales of its products through independent sales representatives, subsequently admitted it lacked the expertise to return The Body Shop to its former glory and its efforts to pull the business out of its slump did not bear fruit.  

The Body Shop acknowledged it had “faced an extended period of financial challenges under past owners, coinciding with a difficult trading environment for the wider retail sector”. 

It added that in the past month it had closed down its The Body Shop At Home service and sold its business across most of Europe and parts of Asia to an international family office. Focusing on the UK business was the next important step in the company’s restructuring, it said.  

A Jones Day spokesperson commented: “The administrators have been appointed to The Body Shop International and, with our assistance, are assessing strategy with the principal objective of rescuing the company and its business on a going concern basis, including the global subsidiaries of the company where possible.” 

The insolvency process relates to the UK business only and does not affect the company’s global franchise partners. The company will continue to trade as normal while in administration.

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