Cosmetics giant L’Oréal is mulling a possible €1 billion (£852 million) sale of The Body Shop, 11 years after buying the British ethical beauty chain.
The French firm has hired bankers at Lazard to explore a potential sale, the Financial Times reported. It bought the company, founded by the late rights campaigner Dame Anita Roddick in Brighton in 1976, for £652 million in 2006 to access the growing market for “green” beauty products.
But The Body Shop, which appointed a new UK boss last month, has struggled in recent years amid intensifying competition from the likes of Lush. It has underperformed versus L’Oréal’s other businesses, with sales rising 2.8% in the third quarter versus 5.6% for L’Oréal’s cosmetics division.
L’Oréal, which has been promoted by model Lily Cole, declined to comment, but it is thought it will announce a review of The Body Shop when it reports annual results tomorrow.
Warwick Business School professor John Colley said cooling interest in ethically-sourced products and a position between discounters and upmarket brands has hurt The Body Shop. “Support for charities and ethical sources was intended to offset much-reduced advertising. The model may have run out of steam,” he said.
