Administrators of The Body Shop are preparing to launch a further restructuring process as it looks to salvage the future of the ethical beauty brand.
FRP Advisory has outlined plans for a company voluntary arrangement (CVA) that would see the retailer enter talks with landlords about rent cuts, as well as other creditors, Sky News reported.
Proposals were sent to The Body Shop’s creditors on Friday morning which revealed the depths of the company’s financial problems inherited by private equity firm Aurelius, which bought the retailer less than four months ago.
In its report, FRP said a CVA would “allow the company to be rescued and exit administration” back into the ownership of Aurelius.
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“In the event that a CVA cannot be agreed, the joint administrators will proceed with a sale of the business and assets,” FRP added.
The Body Shop UK aem collapsed into administration in February and has since closed 197 of its stores.
According to the administrators’ report, The Body Shop owner was confronted immediately after taking ownership of the chain with a “short-term cash position [which] was adverse to that that had been forecast, driven by poor results in the 2023 financial year and the unwinding of the company’s working capital”.
“Prior to the sale to the Aurelius Group, stock levels were depleted over the peak Christmas trading period.”
FRP added that a $76m revolving credit facility had been repaid shortly before the sale, forcing the the private equity firm to seek additional working capital “plus certain exceptional costs that were not foreseen”.
Aurelius is understood to have financed The Body Shop during the administration process.
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