L’Oreal is mulling a €1 billion sale of The Body Shop more than 10 years after snapping up the ethical skincare brand, according to reports.
The French cosmetics giant is said to have drafted in bankers from Lazard to review its options and sound out buyers, with some private equity firms eyeing a possible deal, the Financial Times said. The Body Shop has 10 stores in Ireland.
The Body Shop founder Anita Roddick and her husband banked around £117 million from their 18 per cent stake in the business when they backed the board’s decision to push through a £652.3 million sale to L’Oreal in March 2006.
Performance
However, the performance of the ethically focused firm has waned in recent years in contrast to the wider L’Oreal group. John Colley, professor of practice at Warwick Business School, said there will be no shortage of suitors for the British skincare brand.
“This would be an interesting sale as consumer interest has cooled in ethically-sourced products in recent years.
“The Body Shop also finds itself somewhere between the discounters and the more upmarket brands which are supported by major advertising revenue.
“The Body Shop’s support for charities and ethical sources was intended to offset much-reduced advertising. The model may have run out of steam. However, there will be no shortage of private equity funds looking to acquire it.”
Sales
L’Oreal announced last year that like-for-like sales at The Body Shop had fallen 0.6 per cent in the half year to the end of June, triggered by an economic slowdown in Hong Kong and Saudi Arabia.
The Roddicks started The Body Shop in 1976 to help support their two young daughters, Justine and Samantha.
The company has 3,000 stores in 66 countries, employing around 22,000 people.
