A consortium led by British business magnate Mike Jatania has agreed to buy The Body Shop out of insolvency.
The takeover of the struggling cosmetics retailer is expected to be completed in the coming weeks, according to a statement released on Wednesday.
The Body Shop filed for bankruptcy in February, resulting in the closure of 75 workshops and the loss of 489 jobs.
Mike Jatania’s investment firm Aurea is leading a consortium seeking to take over the struggling company.
Charles Denton, the former managing director of the cosmetics brand Molton Brown, is set to lead the management team.
The joint administrators of The Body Shop International and Aurea said: “Although the transaction has not yet been completed, we are convinced that the combined experience of the consortium together with the existing management team will provide the best outcome for creditors and ultimately ensure the long-term success of The Body Shop.”
“A due diligence review is now being carried out. The aim is to complete the transaction in the next few weeks.”
The insolvency administrators confirmed that no further comments will be made until the transaction is completed.
What went wrong at The Body Shop?
In February, reports first emerged that the well-known company was in financial difficulties after trading during the important Christmas period and into January was not as strong as previously hoped.
Insolvency administrators FRP added that the company had “faced financial challenges under previous owners for an extended period, coinciding with a difficult trading environment for the wider retail sector”.
But according to an expert at AJ Bell, the company’s problems have been around for a long time and are due to the fact that its competitors also emphasize their ethical values in their marketing.
Investment analyst Dan Coatsworth said: “The Body Shop has had both operational and reputational problems for some time.
“The company is best known for its brick-and-mortar stores, but has likely been overtaken by more flexible online sellers.
“The cosmetics sector is highly competitive and not everyone in this industry will be successful when the economy is stagnating like it is now.
“The company used to be known for its ethical stance, but that aura no longer shines so brightly. This is partly because so many companies have touted their ethical values, causing The Body Shop to get lost in the crowd.
“There were also suggestions that the company was more concerned with profit than success, having had different owners over the past two decades.
“The brand feels dated and consumers have a wide choice of cosmetics, skincare and perfume. The older generations who remember the brand values may still love it, but for younger people, The Body Shop is not a place they want to actively shop.
“With stores less busy, tills not ringing as quickly as desired and brand strength waning, it’s no wonder The Body Shop is struggling in the UK.”
