Have administrators found a way to salvage The Body Shop?

The Body Shop’s administrators are drawing up plans to launch a further restructuring process in an attempt to save Britain’s high-street favourite from closure.

Insolvency practitioners FRP Advisory have outlined a proposal for a Company voluntary arrangement (CVA). This would see the company pay back creditors, such as landlords, over a period of time.

If salvaged, the company would continue to trade under the ownership of Aurelius, the investment firm which took control of it at the start of the year. Aurelius’s deal to buy New York-listed Natura & Co, the previous owners of The Body Shop, was announced in mid-November and completed at the end of December 2023.

The administrators said that once the acquisition had been completed "it became apparent that the short-term cash position of the company was adverse to that that had been forecast", therefore The Body Shop fell into administration in early February.  In the weeks that followed, close to half of The Body Shop's 197 UK stores have been shut permanently, with hundreds of jobs also lost at its head office.

According to proposals sent to The Body Shop's creditors on Friday morning, a CVA would "allow the company to be rescued and exit from administration".

FRP said in its report: "In the event that a CVA cannot be agreed, the joint administrators will proceed with a sale of the business and assets."

However, a CVA, which would not be expected to result in further store closures, would need the approval of creditors to be adopted. Meanwhile, during the administration process, Aurelius is understood to have continued financing the business.

The Body Shop was founded by Dame Anita Roddick in 1976, trading out of a small shop in Brighton originally and made its name selling cruelty-free fairtrade products. But, administrators said, in the late 1990s, the company was "no longer offering a distinctive product" at an attractive price as other brands adopted similar policies and stricter laws came into force.

In 2006, the company was sold to cosmetics giant L’Oreal "who deviated from the core values that drove the brand’s earlier success," FRP said. Natura bought the business in 2017 and attempted to return the brand to its founding principles. That effort was "ultimately unsuccessful" in getting consumers interested again.

By the time it was bought by Aurelius, the business employed about 10,000 people and operated approximately 3,000 stores in 70 countries.