Next has approached administrators to The Body Shop about a potential deal to purchase parts of the stricken cosmetics chain.
Sky News has learnt that executives from the UK fashion retailing giant have contacted FRP Advisory to express an interest in acquiring assets as part of any sale process it decides to launch.
There were doubts this weekend, however, that FRP, which was appointed to handle the insolvency of The Body Shop in the UK earlier this month, would elect to run a conventional auction, with one source suggesting that contact between FRP and Next had already stalled.
Next is understood to have been monitoring The Body Shop for some time, but people close to the FTSE-100 company confirmed that it had expressed an interest in assembling a deal.
The retailer, run by Lord Wolfson, has become one of the most prolific buyers of distressed retail businesses in Britain in recent years.
Among the brands it has acquired are Fat Face, Joules and the online furniture retailer, Made.com.
It has also snapped up Cath Kidston and JoJo Maman Bebe, the maternity wear retailer, while it has struck partnerships with Victoria’s Secret and Gap.
One obstacle to any deal with The Body Shop may lie in the fact that its brand and intellectual property (IP) assets are not part of the administration process.
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It is understood that Aurelius, which has only owned The Body Shop since 1 January, is financing the rest of the business, and as part of that has secured major assets including stock and IP.
FRP is expected to decide whether to launch an auction within weeks, with a sale of the restructured business in its new form back to Aurelius a possibility.
If Next did pursue a purchase of the chain, it would be unlikely to retain many, if any, of The Body Shop’s British stores.
“Following the earlier sale of loss-making businesses in much of mainland Europe and parts of Asia, and to support a simplified business, The Body Shop will also restructure roles in its head office,” the administrators said on Tuesday.
Hundreds of jobs will be lost from the store closures and a downsizing of its head office that will leave roughly 400 people employed there.
“This swift action will help re-energise The Body Shop’s iconic brand and provide it with the best platform to achieve its ambition to be a modern, dynamic beauty brand that is able to return to profitability and compete for the long term,” FRP added.
Image: Dame Anita Roddick, founder of The Body Shop, in 2003. Pic: Reuters
Sky News’ revelation that Aurelius was preparing to appoint administrators sparked a vigorous debate about why the brand founded by the late Dame Anita Roddick and her husband Gordon nearly 50 years ago had faltered.
‘Mismanaged for years’
Aurelius bought the business from Natura, a Brazilian company, late last year and rapidly discovered that it had insufficient working capital and that it was trading even more poorly than anticipated.
One retail executive suggested there were serious questions for Natura to answer, saying: “This company did not fail in the last six weeks, it has been underinvested in and mismanaged for years.”
The Body Shop’s businesses across most of Europe and parts of Asia have already been offloaded to a family office following the company’s acquisition by Aurelius in a deal it said was valued at £207m.
At the time of the deal, The Body Shop employed about 10,000 people, and operated roughly 3,000 stores in 70 countries.
Although it has struggled for profitable growth for years, it has retained a prominent presence on British high streets.
The Roddicks were prominent champions of environmental causes, a positioning which helped it gain an edge over rival retailers during the 1980s and ’90s.
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Its opposition to the animal testing of cosmetics was also unusual in the decades immediately after it was founded.
Its distinctiveness has, however, been diminished in recent years by the emergence of competitors which have also put sustainability at the heart of their businesses while more effectively targeting younger consumers.
Dame Anita died in 2007.
Natura was reported to have paid more than $1bn to buy The Body Shop in 2017.
It was owned by L’Oreal, the cosmetics giant, prior to its sale to Natura.
Marks & Spencer (M&S) has ordered hundreds of agency workers at its main distribution centre to stay at home as it grapples with the unfolding impact of a cyberattack on Britain’s best-known retailer.
Sky News has learnt that roughly 200 people who had been due to undertake shift work at M&S’s vast Castle Donington clothing and homewares logistics centre in the East Midlands have been told not to come in amid the escalating crisis.
Agency staff make up about 20% of Castle Donington’s workforce, according to a source close to M&S.
The retailer’s own employees who work at the site have been told to come in as usual, the source added.
“There is work for them to do,” they said.
M&S disclosed last week that it was suspending online orders as a result of the cyberattack, but has provided few other details about the nature and extent of the incident.
In its latest update to investors, the company said on Friday that its product range was “available to browse online, and our stores remain open and ready to welcome and serve customers”.
“We continue to manage the incident proactively and the M&S team – supported by leading experts – is working extremely hard to restore online operations and continue to serve customers well,” it added.
It was unclear on Monday how long the disruption to M&S’s e-commerce operations would last, although retail executives said the cyberattack was “extensive” and that it could take the company some time to fully resolve its impact.
Shares in M&S slid a further 2.4% on Monday morning, following a sharp fall last week, as investors reacted to the absence of positive news about the incident.
At that price, the company’s founder and chief executive, Will Shu, would be in line for a windfall of more than £170m.
Deliveroo further announced, before trading on Monday, that it had suspended its £100m share buyback programme.
The opening share price reaction took the value to 171p per share – still shy of the 180p on the table – and well under the 390p per share flotation price seen in 2021.
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Deliveroo’s shares have weakened nearly 50% since their market debut.
The deal is not expected to face regulatory hurdles as it provides DoorDash access to 10 new markets where it currently has no presence.
But a takeover would likely represent a blow to the City of London given the anticipated loss of a tech-focused player.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “If the deal is done at that price, the company will fail to shake off the ‘Floperoo’ tag it was saddled with after its disastrous IPO debut in 2021.
“Even though Deliveroo has finally broken through into profitable territory, the prolonged bout of indigestion around its share price has continued.
“The surge in demand for home deliveries during the pandemic waned just as competition heated up. Deliveroo’s foray into grocery deliveries has helped it turn a profit but it’s still facing fierce rivals.”
She added: “The DoorDash Deliveroo deal will be unappetising for the government which has been trying to boost the number of tech companies listed in London.
“If Deliveroo is purchased it would join a stream of companies leaving the London Stock Exchange, with too few IPOs [initial public offerings] in the pipeline to make up the numbers.”
A trade deal with the US is “possible” but not “certain”, a senior minister has said as he struck a cautious tone about negotiations with the White House.
Pat McFadden, the Chancellor of the Duchy of Lancaster, told Sunday Morning with Trevor Phillips there was “a serious level of engagement going on at high levels” to secure a UK-US trade deal.
However, Mr McFadden, a key ally of Sir Keir Starmer, struck a more cautious tone than Chancellor Rachel Reeves on the prospect of a US trade deal, saying: “I think an agreement is possible – I don’t think it’s certain, and I don’t want to say it’s certain, but I think it’s possible.”
He went on to say the government wanted an “agreement in the UK’s interests” and not a “hasty deal”, amid fears from critics that Number 10 could acquiesce a deal that lowers food standards, for example, or changes certain taxes in a bid to persuade Donald Trump to lower some of the tariffs that have been placed on British goods.
And asked about the timing of the deal – following recent reports an agreement was imminent – Mr McFadden said: “We’ll keep working with the United States and keep trying to get to an agreement in the coming weeks.”
As well as talks with the US, the UK has also ramped up its efforts with the EU, with suggestions it could include a new EU youth mobility scheme that would allow under-30s from the bloc to live, work and study in the UK and vice versa.
Mr McFadden said he believed the government could “improve upon” the Brexit deal struck by Boris Johnson, saying it had caused “an awful lot of bureaucracy and costs here in the UK”.
He said “first and foremost” on the government’s agenda was securing a food and agriculture and a veterinary agreement, saying it was “such an important area for the UK and an area where we’ve had so much extra cost and bureaucracy because of Brexit”.
He added: “But again, as with the United States, there’s no point in calling the game before it’s done. We’ve still got work to do, and we’re doing that work with our partners in the EU.”
The Cabinet Office minister also rejected suggestions the UK would have to choose between pursuing a trade deal with the US and one with the EU – the latter of which has banned chlorinated chicken in its markets – as has the UK – but which the US has historically wanted.
On the issue of chlorinated chicken, Mr McFadden said the government had “made clear we will not water down animal welfare standards with either party”.
“But I don’t agree that it’s some fundamental choice beyond where we have to pick one trading partner rather than another. I think that’s to misunderstand the nature of the UK economy, and I don’t think would be in our interests to put all our eggs in one basket.”
Also speaking to Trevor Phillips was Tory leader Kemi Badenoch, who said the government should be close to closing the deal with the US “because we got very close last time President Trump was in office”.
She also insisted food standards should not be watered down in order to get a deal, saying she did not reach an agreement with Canada when she was in government for that reason.
“What Labour needs to do now is show that they can get a deal that isn’t making concessions, so we can have what we had last month before the trade tariffs, and we need serious people doing this,” she said.