L’Oreal looks to sell The Body Shop

bodyshopFrench cosmetics giant L’Oreal is reportedly exploring a $1.4 billion sale of its ethical skincare business The Body Shop amid slow sales across the retail unit’s global network.

L’Oreal is reportedly working with bankers at Lazard to review its options for divesting from the UK headquartered chain, which it acquired 11 years ago.

The Body Shop, which has more than 3,000 stores in 66 countries, reported like-for-like sales decline of 0.6 per cent in the first half of last year, with operating losses worsening to $31 million.

Commenting on the reports, Euromonitor’s senior industry analyst, beauty and personal care, Nicholas Micallef, said that the move is unsurprising given how far The Body Shop is trailing behind L’Oreal’s other retail ventures.

“While the company’s numerous brands advanced ahead in its key four divisions, in particular, the Luxe, Active Cosmetics and Professional divisions, The Body Shop trailed behind,” he said.

“The Body Shop performed more strongly in Asian markets, such as India and Indonesia [but] as the French owner of a British brand, pulling the plug off the UK is probably too controversial […] allocating greater resources to the brand in Asia may not be L’Oréal’s priority.

“The company’s focus is to conquer China, which has been doing successfully with Garnier, launching the Ultra Doux line in 2016. Moreover, its 2014 acquisition of Magic Holdings, has yet to yield better results, and making this acquisition a worthwhile venture requires more efficient use of the company’s resources,” Micallef said.

“The Body Shop is better suited in the hands of a beauty player seeking a lower-cost debut in Asia, and can take on the British brand as a stepping stone into the region,” he added.

L’Oreal is also investing into other skincare businesses, acquiring US based brands CeraVe, AcneFree and Ambi from pharmaceutical company Valeant last month for US$1.3 billion.

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