Amid the ongoing judicial recovery process in the United Kingdom, the British beauty brand The Body Shop has decided to shut down its operations in the United States and close 33 of its 105 stores in Canada. This move follows the sale of the company’s operations in France and Germany by Aurelius at the end of January.

Aurelius is a European private equity firm that primarily focuses on acquiring stakes in companies with growth potential or those facing operational and financial challenges. To achieve its objectives, Aurelius adopts an active management approach, working closely with acquired companies to implement operational and strategic changes. This may involve restructuring operations, optimizing processes, reallocating resources, and even selling non-essential assets.

In addition to closing physical stores, the brand has also halted its online sales in the United States. In a press release, the company stated that, in line with the restructuring process in the United Kingdom, The Body Shop in Canada will also undergo restructuring to seek a suspension of executions and gain additional time while evaluating strategies and implementing initiatives to reorganize its operations.

Market analysis suggests that high inflation in recent years, both in Canada and other countries, has negatively impacted retailers like The Body Shop, which has a predominant presence in shopping malls and primarily caters to the middle class.

The challenges faced by The Body Shop include:

1. Ownership Changes: Since its founding in 1976, The Body Shop has undergone several ownership changes, having been acquired by the French group L’Oréal in 2006 and later by Natura in 2017. These changes may have caused integration and strategic alignment challenges.
2. Brand Exploitation Challenges: After its acquisition by Natura, it was recognized that the Brazilian company struggled to fully leverage The Body Shop’s global potential. This could include difficulties related to marketing strategy adaptation, distribution, and brand management across different markets.
3. Competition in the Cosmetics Sector: The cosmetics market is highly competitive, with multiple brands vying for consumer attention. The Body Shop faces challenges in standing out and maintaining its relevance amidst intense competition.
4. Retail Sector Evolution: The retail sector has undergone significant changes in recent years, with the rise of e-commerce and new business models. The Body Shop may struggle to adapt to these changes and maintain a strong presence both in physical stores and online.
5. Sustainability Challenges: While known for its ethical approach and commitment to sustainability, The Body Shop may face additional challenges in maintaining and effectively communicating these values in an increasingly environmentally conscious market.

These combined factors contribute to the difficulties faced by The Body Shop, requiring careful strategies to overcome them and ensure the brand’s long-term success.

Following its acquisition by the European private equity firm Aurelius, it became evident that The Body Shop’s operations faced significant challenges, with commercial performance falling short of expectations, particularly during the holiday season while still under Natura’s control.

An analysis revealed that the retail chain, which had 2,500 stores in over 70 countries when Aurelius finalized the deal, was spread across unprofitable markets. Among the attractive markets were the United Kingdom, Canada, and Australia. However, even in these markets, the company faced significant losses, as demonstrated by a loss of R$ 444 million in 2022 compared to a profit of R$ 62 million the previous year.

Under Aurelius’ management, The Body Shop sought loans that put some of its most valuable assets, including intellectual property and real estate, at risk. This means that in the event of bankruptcy, Aurelius could claim these assets.

As part of its efforts to restructure operations, the company agreed to sell part of its business, including operations in France and Germany, at the end of January. This move was seen as an important step in implementing a more robust recovery strategy for The Body Shop.

Additionally, the company filed for bankruptcy in Germany, where it employed 350 workers in 2021, as part of its efforts to address financial difficulties.

The Company:

The Body Shop is a global brand specializing in cosmetics, body care, and beauty products, founded in 1976 by Anita Roddick and her husband, Gordon Roddick. The company gained prominence for its innovative approach, combining business with ethical values and social activism. From the beginning, The Body Shop committed to producing natural products, free from animal testing, while supporting social and environmental causes.

One of The Body Shop’s defining features is its emphasis on natural and organic ingredients. The brand pioneered the use of sustainably sourced ingredients, such as plant oils, fruits, herbs, and plant extracts, in its products. Additionally, The Body Shop is known for its strict policy against animal testing, being one of the first cosmetic companies to take such a stance.

Another distinctive aspect of The Body Shop is its commitment to social and environmental activism. The company engages in various corporate social responsibility initiatives, including campaigns against the use of animal-derived ingredients, advocating for human rights, and environmental protection. The brand also supports community projects and non-profit organizations worldwide.

Over the years, The Body Shop has expanded its global presence and developed a broad range of products for skincare, body care, hair care, and makeup. Its stores are known for offering a unique sensory experience, featuring natural products and a warm, inviting atmosphere.

Although the brand has undergone ownership changes over time, its commitment to ethical and sustainable values has remained constant. The Body Shop has been an influential leader in the cosmetics industry, inspiring other companies to follow its example and drive positive change in the world.