Brazil-based beauty conglomerate Natura & Co is weighing the possibility of selling The Body Shop, following a string of declining sales in its skincare and cosmetics division. This decision was disclosed in a securities filing on 28 August.
Natura & Co, known for its ownership of the Avon and Natura brands, as well as its ongoing sale of the Aesop line to L’Oreal, indicated in the filing that its board of directors had recently granted authorisation to explore strategic options for The Body Shop.
Among the strategic alternatives being considered is the potential sale of The Body Shop, as outlined in the document. However, it’s important to note that there is no guarantee that this exploration will culminate in any transaction.
The company emphasised that it does not intend to comment on or provide updates regarding this matter unless it deems further disclosure necessary.
Change of course due to declining sales
In 2022, Natura, headquartered in Sao Paulo, denied rumours of considering a sale of The Body Shop. However, a year later, the company is actively seeking a buyer due to consistent sales declines at the brand.
In its second-quarter results announced on 15 August, Natura & Co revealed that sales at The Body Shop had dropped by 12% to 800m reais ($163.7m).
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The Body Shop, which specialises in natural skin, hair and makeup products, has a significant presence in US malls but has faced continuous challenges in maintaining its sales figures.
Challenges amid shifting consumer habits
Executives at The Body Shop have been diligently working to enhance sales and reduce operational costs, aiming to improve profit margins and generate cash.
While the broader retail sector has grappled with sluggish sales due to persistent inflation and high interest rates, the beauty industry has remained a notable exception, with numerous cosmetics companies reporting consistent growth and profitability.
Nonetheless, The Body Shop has faced difficulties retaining its market share and adapting to evolving consumer behaviours that shifted during the Covid-19 pandemic. These challenges were acknowledged by executives during an earnings call in August.
To counteract the sales decline, the company has pursued strategies such as boosting digital sales and overhauling its product range to place a greater emphasis on skincare.