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Share Article: The Body Shop – The fall of another well know High Street brand

Posted by Mira Arezina, Partner

Yesterday, after days of speculation it was announced that FRP Advisory (“the Administrator”) has been appointed as the Administrator of The Body Shop.

I remember The Body Shop from the 1980’s – the first Body Shop I went to was in Portobello Market. A group of us would head off, during our break at Sunday school, up to Portobello to buy ourselves a bottle of Fuzzy Peach, Ananya, lip balm or fruit shaped soaps.

When it first hit the high street, there was nothing else like it – the products were made from natural products, not tested on animals, the packaging could be refilled, and they promoted fair wages for their farmers. It was groundbreaking and pioneering – in 1986 The Body Shop also campaigned against whaling and promoted jojoba oil as a substitute for sperm whale oil, which, at the time, was widely used in cosmetics.

So, where did it go wrong? Some would say that in 2006, when Dame Anita Roddick sold the Body Shop to L’Oréal (a company associated with animal testing), the passion behind the brand was no longer at the helm and it lost its innovation, passion and flare. L’Oréal marked up the prices to then discount them to their true price, losing valuable customers. Further still that, despite the various owners, there has been no investment in the brand.

No matter the cause, it will be a sad day should The Body Shop disappear from our high streets.

What next?

Now that the Administrator has been appointed, a moratorium will be in place to allow the Administrator to consider whether the Body Shop can be rescued with its primary objective, if possible, the rescue of the business so that it can continue as a going concern. In fact, Administrator has stated that it will “consider all options to find a way forward for the business” and stressed that this only affects The Body Shop’s UK business and does not impact on the international franchises. The rescue plan could include closure of stores (there are approximately 200 stores) and selling off parts of the business as well as the human cost of redundancies. In the meantime, The Body Shop will continue to trade.

While the moratorium is in place, the Landlord’s options to recovering rent is severely limited as it will not be able to take any action such as issuing proceedings or forfeiting the lease, without an order of the Court. Where the Administrator continues to trade from premises, rent that falls due during their period of occupation will be an expense of the administration. However, where rent fell due before the Administrator was appointed, then it will not be an expense of the administration and will be paid or partially paid (if at all) only if there is a sufficient surplus.

Conclusion

We may see, as we have with HMV, Debenhams and House of Fraser, that The Body Shop develops more of an online presence. Also, since 1994 when The Body Shop launched “The Body Shop at Home”, there have been teams of, predominantly, women running parties at their home where they sell The Body Shop’s products. It may be that these events will become more popular.

This is another blow for the high street and is likely to affect many landlords in England and Wales, especially those in already blighted areas. The effects of The Body Shop’s Administration could go further afield to the overseas farmers/suppliers, those who Dame Anita Roddick ensured were paid fairly and not exploited by large corporations.

If you are require advice on any Insolvency aspect please contact a member of my team on 020 7935 3522 or marezina@freemanssolicitors.net.

 

 

 

 

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