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From cult status to closure fears — what happened to The Body Shop?

From cult status to closure fears — what happened to The Body Shop?

It's a store you know by scent.

For decades, the sometimes-overwhelming aroma of The Body Shop's satsuma soaps and coconut body butters have wafted through mall concourses, as much a staple to the culture as the food court.

The U.K.-based beauty and cosmetics shop has more than 3,000 retail locations in 70 countries, including 110 standalone shops in Canada. In the 1990s and early 2000s, the store practically took on cult status with teenagers and young adults who sought out naturally-based ingredients and swore by its tea tree oil line.

But just a few weeks after The Body Shop International was acquired by private equity firm Aurelius Investment, the company is reportedly appointing administrators, a move that could likely lead to job losses and store closures in the U.K. — although it's not yet clear whether stores in Canada will be affected.

Putting a company into administration if it cannot pay its debts protects it from legal action or creditors.

The move is fairly typical when a private equity firm takes ownership and needs to make profit and cut losses in a very short period of time, Kai Li, a professor of finance at UBC's Sauder School of Business and Canada Research Chair in Corporate Governance, told CBC News.

Plus, she said, the economic impacts of Brexit are starting to spill over into the U.K.'s retail market.

"This is a weak market for them, so they're just cutting their losses," Li said. "A very much-loved brand is now unfortunately on the chopping block."

CBC News has reached out to Aurelius and The Body Shop for comment but had yet to receive a response at the time of publication.

According to Sky News, which first reported on the appointment of administrators, the administration process for The Body Shop's U.K. operations "will not impact the brand's global franchise partners."

Weak period of sales: report 

Sky News reported that Aurelius is allegedly lining up restructuring expert FRP Advisory to manage an insolvency process. This follows a weak period of trading over the Christmas holidays and January, according to media reports.

Fans of the store have decried the news, including British actor Adjoa Andoh of Bridgerton.

"Heartbroken at the demise of The Body Shop, for its body butters, make up range, ethical value system, solidarity with communities across the world who grow the ingredients. I have been shopping continuously at The Body Shop since the 1970s. I am bereft," the actor wrote on X, formally known as Twitter.

Other users called the store "revolutionary" for its greener, ethical approach to business. The beauty brand has campaigned for decades against animal testing in cosmetics.

British columnist Zoe Williams wrote in the Guardian on Monday that she would mourn The Body Shop, which she describes as "a gateway to politics for animal-obsessed teenagers like me."

Larry Ellis/Daily Express/Hulton Archive/Getty Images
Larry Ellis/Daily Express/Hulton Archive/Getty Images

The Body Shop was founded in 1976 in Brighton, England, by Dame Anita Roddick. It focused on offering naturally inspired skin care, body care, hair care and makeup that was ethically and sustainably produced at a time when those practices weren't yet mainstream.

Roddick died in 2007 at age 64.

"The pre-digital disruptor, Anita Roddick and The Body Shop were brave, instinctive and unignorable," U.K. MP Peter Kyle wrote on X Monday.

Changing hands

The brand first expanded into Canada in 1980, and today has about 110 standalone stores. In 2004, The Body Shop Canada sold itself to its U.K. parent company, the Body Shop International, for about $26 million.

In 2006, the company joined L'Oreal Group, then in 2017 it joined Brazilian company Natura &Co. In December, the company was acquired by Aurelius Group.

"Despite the challenging retail market there is an opportunity to re-energize the business to enable it to take advantage of positive trends in the high-growth beauty market," Aurelius said in a November news release announcing the upcoming acquisition.

WATCH | Why 'Sephora kids' are taking over:

A spokesperson for Natura &Co told CBC News the company was surprised to learn through the media of Aurelius's intentions to appoint an administrator. In an email statement, the spokesperson added the company was "especially concerned by reports that certain outstanding payments owed to current and former employees of The Body Shop have not been paid by Aurelius."

Part of the terms of the sale between the two companies included these payments through an agreed-upon reduction to the purchase price, the spokesperson said. Natura &Co sold The Body Shop for 207 million pounds, or about $351 million Cdn.

"We have sought an explanation from Aurelius for the failure to make these payments and have contacted Aurelius and its advisors on several occasions regarding these matters."

Administration decision 'a reality check'

Li calls Aurelius's reported decision to appoint administrators "a reality check."

"It also bodes badly for other Body Shop operations around the world. They might be the next, it really depends on what they can contribute to the bottom line of the new owners."

Last year, The Body Shop brand was launched at 50 Shoppers Drug Mart stores across Canada.

The Body Shop also opened a handful of "Changemaker's Workshop" stores in major Canadian cities to "empower Canadians to channel their inner activist" — welcoming higher traffic and sales compared with traditional stores, according to Hilary Lloyd, VP of brand & corporate social responsibility for The Body Shop North America.

Canadian beauty industry sales rose 18 per cent in 2023, according to global analytics firm Circana. The firm predicts an overall global increase will continue this year, especially for higher-end products.