The Body Shop under fire for missing millions and ‘profitable’ closures
Body Shop administrators are closing dozens of stores, despite them being profitable last year, documents have shown. Now, questions about the circumstances in which the business went into administration are starting to grow.
FRP Advisory has said that it will close 82 of The Body Shop’s stores to shore up the cosmetics retailer’s finances ahead of a potential auction after The Body Shop collapsed a few weeks after private equity firm Aurelius bought it for £207m.
However, a leak of documents over the weekend showed that last year just eight of The Body Shop’s 206 stores in the UK were loss-making. Two shops earmarked for closure in Ipswich and Hempstead Valley made nearly £100,000 in underlying profit each, prompting calls for a more thorough review of The Body Shop’s failure.
However, a source close to the matter told CityAM that while some stores being sold may have been profitable last year, closures were calculated on forecasted profitability and those chosen were loss-making in the months leading up to the collapse.
Separate ruptures have also emerged around the handover of The Body Shop to Aurelius from its previous owner Natura.
FRP is said to have written to Natura asking why millions of pounds were extracted from the business between the announcement of its sale and the completion.
Meanwhile, Natura is questioning why payments to The Body Shop executive, which were agreed as part of the sale, have not yet been made.
Aurelius is believed to have folded those payments into the wider administration process after the state of the wellness brand’s finances were found to be considerably worse than expected. This means FRP will assess the importance of the payments among The Body Shop’s wider financial obligations.
Commenting on the administration process to date, Liam Byrne MP, chair of the Business Affairs Select Committee, said: “The Body Shop was a trailblazer for ethical enterprise and it now looks like it’s being crashed while the taxpayer picks up a big bill for redundancy payments.
“Something doesn’t sound healthy in these business models and we’re determined to get to the bottom of it.”
Natura was contacted for a response. Aurelius and FRP declined to comment.