HMV owner explores The Body Shop bid as US and Canada arms file for bankruptcy
HMV owner Doug Putman is understood to be exploring a bid to buy The Body Shop out of administration.
Putman, who is best known for rescuing record shop HMV out of administration in 2019 and overseeing its turnaround, has contacted The Body Shop’s administrators to express an interest in buying the British business, according to The Telegraph.
Acquisitive high street giant NEXT was also previously reported to be considering a rescue bid for troubled beauty brand.
The news comes as The Body Shop files for bankruptcy in the US and Canada, and struggles to pay its suppliers in Australia, as its most profitable overseas businesses face cash shortages following its UK business collapse, according to The Guardian.
The US business has ceased trading at its 50 stores, and filed for Chapter 7 insolvency on Saturday, where its assets are being sold to clear debts, putting approximately 400 jobs at risk.
Sources told The Guardian that money earned by the key overseas businesses during the peak trading period in November and December was paid into a global account, based in the UK, in a practice termed "cash pooling". However, funds in the account are now not available to cover debts to suppliers used during that period as access was cut off when the UK parent company called in the accounting firm FRP Advisory as administrators.
The Body Shop collapsed into administration in the UK last month, shortly after new owners, European private equity firm Aurelius, took control of the business.
However, the circumstances surrounding the collapse are now under scrutiny, with senior MPs calling for an investigation.
FRP is looking into allegations of unaccounted funds that predate The Body Shop's sale to private equity firm Aurelius.
Scrutiny may also be intensified by figures previously seen by The Telegraph, revealing that the company's UK retail arm posted profits of £19 million on revenues of £163 million ahead of its fall into administration, thus triggering questions about why an insolvency process was necessary.
It also comes as The Body Shop's administrators are closing dozens of shops despite them being profitable.
Although FRP said 82 of the brand's UK shops will shut over the next four to six weeks, other internal company documents found that just eight of its 206 UK stores were loss-making last year.
The brand's stores in Ipswich and Hempstead Valley are closing despite respectively contributing £99,000 and £97,000 of underlying profit in 2023.
However, a source close to FRP told The Sunday Times that the closures are based on expected profitability for this year and that the stores were typically loss-making until the final two months.
