In Sectors

The Body Shop gives itself a makeover to repair battered margins

Sales are stalling as a host of new competitors elbow their way into the “green cosmetics” market, and Body Shop’s operating margin has narrowed in each of the last three years, reaching a seven-year low in 2015. The chain is the worst-performing business of its owner, L’Oreal, which bought it in 2006 for GBP652 million (USD917.7m). The brand “has been a major disappointment”, says Sanford C. Bernstein analyst Andrew Wood. “We do not expect any major change in the foreseeable future.”

Jean-Paul Agon, L’Oreal’s chief executive, has pledged to fix the unit, saying sales growth should accelerate this year. That effort is being led by Jeremy Schwartz, who moved from running L’Oreal’s UK business in 2013.

The third executive to try to transform Body Shop in the past decade, Schwartz has reoriented the business around skincare, introducing new products such as Drops of Youth creams and lotions, and hiring uniformed consultants to advise customers about products that suit their complexions. And he’s added more expensive ranges such as Spa of the World Hawaiian Kukui cream, which costs GBP23 – GBP9 more than the company’s regular body butter.

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