The Body Shop UK falls into administration; UK wage growth and US inflation hit rate cut hopes – as it happened

Body Shop UK enters administration, putting jobs and shops at risk

The Body Shop store in Nottingham City Centre.
The Body Shop store in Nottingham City Centre. Photograph: Mike Egerton/PA

Newsflash: The Body Shop has appoints administrators to run its business, and “accelerate” its restructuring.

Tony Wright, Geoff Rowley, and Alastair Massey of business advisory firm FRP have been appointed as Joint Administrators of The Body Shop’s UK business.

They will consider “all options” to find a way forward for the business, and will “update creditors and employees in due course”.

A statement just released from the administrators says:

The Body Shop remains guided by its ambition to be a modern, dynamic beauty brand, relevant to customers and able to compete for the long term. Creating a more nimble and financially stable UK business, is an important step in achieving this.

The Body Shop will continue to trade, with shops and the online site remaining open and making sales while the administrators conduct its restructuring.

The statement adds:

The Body Shop has faced an extended period of financial challenges under past owners, coinciding with a difficult trading environment for the wider retail sector.

Having taken swift action in the last month, including closing down The Body Shop At Home and selling its business across most of Europe and in parts of Asia, focusing on the UK business is the next important step in The Body Shop’s restructuring.

The Body Shop said last night that they intended to appoint administrators.

The move comes just three months after private equity firm Aurelius bought The Body Shop for £207m.

The process is likely to cause dozens of shop closures, putting jobs at risk and threatening a crucial source of sales for a global network of small farmers and producers.

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Key events

Closing post

Time for a recap…

The Body Shop has collapsed into administration in the UK less than three months after it was taken over by a private equity company, in a move that puts more than 2,200 jobs at risk at the cosmetics chain.

Aurelius, the German company that bought The Body Shop for £207m in November, said it had been unable to revive the fortunes of the business after dismal trading over Christmas and new year.

Aurelius confirmed it had appointed the accounting firm FRP Advisory as the administrator, raising concerns over the future of the business founded by the late environmental and human rights campaigner Anita Roddick in 1976.

The Body Shop has almost 200 shops in the UK as well as a distribution centre and head office.

Here’s the full story:

Hopes of early interest rate cuts have faded on both sides of the Atlantic, after the latest economic data.

In the UK, wage growth slowed by less than expected at the end of last year, with average earnings (excluding bonuses) rising by 6.2% per year in the October-December quarter and total pay growth (including bonuses), down to 5.8%. Both fell from 6.7%.

Adjusted for inflation, real earnings were the strongest since summer 2021.

Analysts at Nomura predict the Bank of England might not cut interest rates until August.

But while the unemployment rate fell, the number of people out of work due to sickness remained worryingly high, while vacancies fell.

In another blow to central bankers, US inflation was higher than forecast in January.

The US CPI index slowed to 3.1% in January, higher than the 2.9% forecast, which dampened the odds of rate cuts in March or May.

Daniela Hathorn, senior market analyst at, says:

We’ll likely have to wait for the second half of the year for the Fed to start cutting, but the issue isn’t so much whether the bank will cut rates this year, as that is an almost certainty at this point, but how many rate cuts there will be.

The year started with 150 bps of cuts being priced in. That has now dropped to 96 bps – or just under four 25bps cuts.

Stock markets have fallen into the red, with the FTSE 100 down 77 points or 1% at 7496 points.

The US dollar has rallied, while Wall Street is a sea of red:

Broad distributive pressure today after the hotter than anticipated US CPI data print.

Advancers are at just 11.1% vs decliners at 83.1%.

Really nasty market internals.

— Markets & Mayhem (@Mayhem4Markets) February 13, 2024

Here’s the rest of today’s news so far:

Rivals have stolen a march on what used to be the Body Shop’s “unique eco-credentials”, say Susannah Streeter, head of money and markets at Hargreaves Lansdown:

In the 1980s, the Body Shop was the place to go for young shoppers to splash out on fresh scented bubbles and beauty ranges, with a deep environmental conscience and a focus on social justice and conserving nature.

But now stores like Lush hold the bigger pocket money draw for tweens and teens, lured in by fragrant bath bombs and innovative product ingredients.

Body Shop stores could be forced to close unless a buyer is found for them, warns Roger Hutton, insolvency expert at law firm Clarion.

Following the appointment of FRP Advisory as administrators today, Hutton says:

News that Body Shop has collapsed into administration isn’t a surprise, given its run of financial challenges.

And with businesses trading against the economic backdrop of tighter lending and higher cost inflation, it’s a difficult environment for the retail sector as a whole.

While the Body Shop stores will continue to remain open while the firm is in administration, if a buyer for its stores is not found soon, they may be forced to close.

While it’s unclear whether this could have been prevented, the earlier a business gets advice the better. The earlier interventions are taken, the more solutions there are, such as securing financing on better terms, allowing more time to engage with shareholders and getting a head start on restructuring.

Now, time is of the essence here to secure the future of the brand. The focus needs to be on the UK arm of the business and effectively communicating a plan to employees and creditors.”

Appointing administrators will hopefully act as a springboard for The Body Shop’s future survival, says Jason Freedman, fraud and asset recovery partner at the law firm Gowling WLG.

While drastic changes will need to be made to its business model, the significant resonance which the brand still has with consumers can still be capitalised on if operational changes and a focus on cost reductions at all levels can be aligned with delivering against customer needs.

“That insolvencies are increasing will be of no surprise to anyone who has been paying any attention to the economy recently, Freedman adds:

Companies continue to weather the storms of Brexit, labour shortages and high inflation, often with balance sheets that are struggling to recover from the hit of the pandemic, and with the cost-of-living crisis hitting employees and customers alike.

Now, a prolonged higher interest rate environment is chipping away at margins and threatening to pick companies off as they need to refinance.

Directors of struggling companies need to be aware that there are many options now available to them to save or rescue their businesses, as long as they get the right advice as early as possible and engage with key stakeholders. The longer this is delayed, the fewer options remain.”

Photograph: Geoffrey Swaine/REX/Shutterstock

Today’s fall into administration comes 48 years after environmentalist and human rights activist Anita Roddick founded The Body Shop, in Brighton, in March 1976.

It was bought by cosmetics giant L’Oreal in 2006. But after an unhappy decade, The Body Shop was sold again, to Brazilian cosmetics maker Natura&Co for €1bn in 2017.

Six years later, Natura sold up to private investor Aurelius Group, in a deal worth £207m last November.

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I had a Saturday job at The Body Shop when I was in sixth form. I loved little kids bringing in their pocket money around Mother’s Day and making up the tiniest gift basket with one fruity soap and a couple of bath pearls for them. 😍

— DiscoAlpaca 💜🤍💚 ✂️ (@DiscoAlpaca) February 12, 2024

Here’s Tim Symes, partner in the Insolvency and Asset Recovery team at law firm Stewarts, on the appointment of administrators to run The Body Shop today.

“This could be a tactical administration appointment designed to shed creditors and cut costs following the purchase by new owners just before Christmas, or the directors simply had no choice.

Putting the business through administration will give immediate respite from creditors and allow a leaner, viable business to emerge, albeit with substantial creditor casualties in the form of suppliers and landlords.

As with Wilko, the business left standing is likely to be focussed on its online offering.”

The news that The Body Shop was heading into administration has sparked a flurry of reminiscences on social media, and memories of much-loved products:

Quite sad about The Body Shop news – it was one of my childhood happy places, showed us you could have fun with beauty products as well as care about the planet and the satsuma lip balm could not be beaten

— Kirsty Weakley (@KirstyWeakley) February 13, 2024

Weirdly sad about The Body Shop. Of course, I’ve not shopped there for years and Lush stole a lot of the market. Dewberry and White Musk will last forever (just like the smell would on your clothes).

— Cath Feely (@cathfeely) February 13, 2024

I’m quite sad about this. As a teenager, pre Internet, the Body Shop not only bought White Musk into my life, but also made me aware of social issues. Before they sold out, they seemed like a force for good.

— Vikki Guy (@vikkiguy1) February 13, 2024

The Body Shop appointing administrators is so sad. Difficult to convey how revolutionary it was in the ’80s. The Body Shop on Elvet Bridge in Durham was one of my favourite places in the world. Things like fruit soap, lip balms & bath pearls were completely novel. I loved it.

— Luci Gosling (@lucigosling) February 11, 2024

The Body Shop was such a quintessential part of my teens I remember the soaps, the Henna hair die and the bath pearls, a place were perhaps people didn’t have to conform to conventional gender based beauty norms ? Having said that I hadn’t bought anything for years #ripbodyshop

— Dr Lucy Woollett (Lady Lucy) (@ydalycul) February 13, 2024

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US inflation higher than expected, at 3.1%

Shortly after The Body Shop’s fall into administration was announced, new data showed inflation in the US has slowed – but not by as much as expected.

The headline rate of US inflation fell to 3.1% in January, down from 3.4% in December, but higher than the 2.9% reading which economists expected.

This may make it harder for America’s central bank, the Federal Reserve, to cut interest rates soon (it has a 2% inflation target).

JUST IN: U.S. inflation was 3.1% (y/y) in January, down significantly from 6.4% a year ago.

Falling prices for energy and many goods are really helping inflation cool off.

**Rent and car insurance/repair are the big drivers of inflation now.**

— Heather Long (@byHeatherLong) February 13, 2024

Bryce Doty, Senior VP and Senior PM at Sit Investment Associates, says:

From the Fed’s perspective, economic growth is strong enough that there isn’t a sense of urgency on cutting rates. While I’m not forecasting a recession, there are a number of warning signs that the consumer is stretched thin financially. Not only are credit card balances at all-time highs, people are also increasingly choosing “buy now and pay later” options. Another canary in the coal mine is the degree of complaining about food inflation even though most food prices have stabilized. It tells me that household finances are tight. We expect consumer buying habits to shift towards necessities over luxury goods.

Economic growth will slow, but continue to be strong enough to keep the Fed from cutting rates longer than they should. In the meantime, bond investors will get to enjoy higher yields a little while longer than many thought.”

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The administrators taking control of The Body Shop have a number of options.

Jeremy Whiteson, restructuring and insolvency partner at legal firm Fladgate, explains:

Administrators have broad powers including to sell a business as a going concern, continue the trade, or break up the business and sell stock, brand and other assets.

Which of these routes they take will depend on the state of the company and the level of interest of potential buyers.

The administrators should try to act in the best interest of creditors. This makes for a worrying time for the staff of the groups’ 200 stores.

High street retailers are having a tough time, Whiteson adds:

They have been besieged by multiple challenges- the pandemic, restricted supplies after Brexit, tighter labour markets (leading to upward pressure on wages) and high fuel costs. For Body Shop, with its private equity owners, there is likely to be substantial debt that poses an additional concern as high interest rates increase the burden on the company.

It is hoped that a solution can be found which safeguards the jobs of staff. However, it seems likely that many buyers will simply be interested in the brand and stock, shifting the business to an online operation or to be integrated into a multi-brand retailer (such as Next or Frasers).

Heightened competition to blame for The Body Shop’s downfall, says GlobalData

Unable to keep up with its rivals, The Body Shop’s demise into administration comes as a result of increased competition in a thriving health & beauty market, say GlobalData analyst Tash Van Boxel.

GlobalData forecasts that the UK health & beauty market rose 7.1% in 2023 – but while rivals such as Boots and Superdrug outperformed the market, The Body Shop has lagged behind.

Van Boxel adds:

“The Body Shop’s success in the past was down to its distinct brand identity, with its focus on natural ingredients and fairtrade products being at the fore of its marketing, making the retailer ahead of its time.

While The Body Shop continues to stand by its ethical and cruelty-free brand values, these claims have become industry standards, weakening The Body Shop’s point of difference. Indeed, not only are brands now offering products with similar claims, but they also bring more to the table to attract shoppers.

For example, The Ordinary’s products are cruelty-free and vegan, but it also highlights its science-backed formulas at low price points.”

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