The introduction of new products at the expense of shelf space for old favourites hit Body Shop's full year profits, the ethical cosmetics retailer said today, but it forecast an improvement this year.
Body Shop said lower margins on new products, inadequate management of inventory levels and too heavy a focus on those new products meant it failed to deliver on its strategy.
Pre-tax profits fell 20 per cent to £25 million on turnover up 13 per cent to £374.1 million.
"This is below our expectations and we are disappointed with the outcome," Body Shop said in the results statement.
But it said it was confident the strategy it had put in place would deliver results in the medium and long-term and that the operational difficulties encountered last year could be corrected.
Body Shop's chief executive Mr Patrick Gournay said some of the new launches didn't respect the Body Shop's heritage of natural, simply packaged products, leading to lower sales and high inventory costs.
He gave examples of the poor reception given to Palm Shine shampoo - which the company is reengineering in simpler packaging - and the reintroduction of old favourites, banana and Ice Blue shampoos.
The Body Shop would now focus its strategy on the enhancement of the original Body Shop brand and the reduction of product and inventory costs, he said.