On Saturday, The Body Shop filed for Chapter 7 bankruptcy — in which assets are sold to cover debts — after having ceased its U.S.-based operations and closing of dozens of Canadian stores. Once a retail powerhouse, the company is known for its presence in malls as cruelty-free and “ethically produced” beauty retailer. The Body Shop was even approved for “B Corp” certification, meeting the highest standards for social and environmental performance, in 2019.
Previously, The Body Shop was owned by L’Oréal in 2006 and later sold to Brazilian company Natura in 2017. Despite expanding to more than 2,500 retail locations in 2023, The Body Shop has been facing struggling sales numbers in recent years. Per Natura’s early 2023 report, it had a year-over-year decline of 13.5% in 2022, according to CNN.
As Fashionista reports, in November 2023, German private equity firm Aurelius bought The Body Shop for an estimated $266 million and put the company into administration only weeks after the deal was finalized. According to a report from The Guardian, earnings from November and December were paid into a cash pooling account based in the UK, but those funds are now reportedly not available to cover supplier debts from that period, as access was cut off when the company brought in accounting firm FRP Advisory. “It is understood that the North American and Australasian businesses are now counted as creditors to the UK arm and may have to wait months for any payment via FRP,” per The Guardian‘s report.
The Body Shop’s German, Danish, Irish and Belgian divisions have been put into insolvency, while its operations in Spain, Sweden, France and Austria remain uncertain. Its Australian and New Zealand operations — which include nearly 100 stores — are also at risk.
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