Stay knowledgeable with free updates
Simply signal as much as the Private fairness myFT Digest — delivered on to your inbox.
Brazilian cosmetics firm Natura has agreed to promote The Body Shop to non-public fairness agency Aurelius, after struggling to revive the UK retailer’s fortunes.
The deal provides the corporate an enterprise worth of £207mn, Natura stated in a press release, a fraction of the €1bn that Natura paid to amass the enterprise from L’Oréal in 2017.
For $3.9bn-valued Natura, the divestment represents one other step in a retreat from its as soon as world ambitions. The São Paulo-based group went on a global enlargement drive within the earlier decade, shopping for up The Body Shop after which door-to-door vendor Avon Products for $2bn in 2019.
Founded in 1976 by the late Anita Roddick and her husband Gordon, The Body Shop was among the many first corporations to advertise so-called moral consumerism which argued that enterprise might be a drive for good.
The Body Shop now has about 2,500 outlets throughout greater than 70 international locations and sells a spread of skincare, physique care and hair care merchandise, amongst different issues, which haven’t been examined on animals and are more and more vegan.
Aurelius, which has places of work throughout Europe, specialises in shopping for and turning round unloved companies carved out of corporates or corporations dealing with operational difficulties.
“The Body Shop is a business many of us grew up with,” Tristan Nagler, a companion at Aurelius, informed the Financial Times in an interview. “There is an opportunity to put it on its own two feet and return it to its former glory.”
Aurelius is betting that it might probably enhance the efficiency of a enterprise that has struggled below Natura’s possession and needed to cope with different corporations catching up with its once-unique moral messaging.
After a few years of improved efficiency, The Body Shop’s monetary figures as soon as once more disillusioned buyers and analysts in 2022.
The retailer’s declining gross sales continued within the third quarter, falling 13 per cent in fixed foreign money phrases to R$830mn. Core earnings took successful from restructuring prices, with earnings earlier than curiosity, tax, depreciation and amortisation down two-fifths to R$62m.
Nagler stated Aurelius sees a chance to construct out The Body Shop’s on-line presence, an space the place the sweetness market has not been as fast as different industries to generate gross sales.
“It’s still quite bricks and mortar,” Nagler added, referring to the sweetness market extra broadly. “The whole industry is lagging a little bit and there is no great reason for that.”
Aurelius has sealed offers in consumer-facing retailers together with shopping for sportswear retailer Footasylum from JD Sports final 12 months.
“We are judging every situation on its merits and try to be open-minded,” Nagler stated. Despite rising competitors, he stated, “the beauty market is incredibly attractive and growing strongly”.
Natura’s possession of The Body Shop and Avon turned it into the world’s fourth-largest pure-play magnificence firm. But the beauty conglomerate’s makes an attempt to revive the fading marques faltered.
A chief govt appointed final 12 months, former banker Fabio Barbosa, has launched into a company turnaround effort, promoting off enterprise models as administration appears to sort out its debt ranges.
Natura stated below its possession The Body Shop had “undergone an overhaul of its product portfolio and a rejuvenation of the brand”.
“We are pleased to have found a strong home for The Body Shop to write the next chapter in its remarkable story,” added Barbosa.
Natura offloaded luxurious Australian magnificence outfit Aesop to business rival L’Oréal earlier this 12 months on an enterprise worth of $2.5bn.
It is now specializing in integrating its eponymous model, famed for sourcing sustainable substances for soaps and shampoos from the Amazon rainforest, with the Latin American operations of Avon.
While Natura’s share value has rallied about 30 per cent thus far this 12 months, the shares are down sharply from a peak in July 2021.