L’Oréal signed a contract on Tuesday to sell The Body Shop to the Brazilian cosmetics maker Natura Cosméticos as it seeks to grow internationally. Earlier this month, the French beauty products group had surprised many by announcing it was in exclusive talks to sell the British high street stalwart to Natura after failing to boost sales. “L’Oréal announces that the contract for the sale of The Body Shop to Natura was signed,” L’Oréal said in a statement on Tuesday. “The proposed sale is subject to clearance by antitrust authorities notably in Brazil and in the United States, and expected to close during 2017.” For the latest kit from the Body Shop you can check this on their website.
The deal gives the British chain with locations around the world an enterprise value of €1bn. Natura was founded in São Paulo in 1969 by Luiz Seabra and is one of Brazil’s most valuable brands. The company has said that after integrating The Body Shop, founded in 1976 by entrepreneur Anita Roddick, the combined group would have a turnover of R$11.5bn (US$3.5bn), with 17,000 employees and 3,200 stores. The Body Shop has faced increasing competition from other brands offering similar products based on natural ingredients with no animal testing. Sourcing many of its materials from the Amazon rainforest Natura, which also owns the Aesop beauty brand, has been successful in delivering to Brazil’s giant middle-market, but is looking for further growth.
“The acquisition of The Body Shop is a decisive step in making Natura Group an international player in the cosmetics industry, following in the footsteps of our previous acquisition of Aesop in 2013,” said João Paulo Ferreira, Natura’s chief executive, during a conference call after the announcement was made on June 9. “In a sense, Natura and The Body Shop are like twins. We have been walking parallel paths in the past, and today, those paths are converging. We both share a same vision of cosmetics, advocating the use of natural ingredients, seeking to use our business as a platform to raise environmental consciousness,” he added.
As L’Oreal revealed the prospective buyer for The Body Shop, some of the brand’s loyal users may have heaved a collective sigh of relief. As we discussed earlier, L’Oreal was in talks with a few entities to sell The Body Shop, the brand that it acquired from Anita Roddick back in 2006. It has been revealed that leading Brazilian beauty company Natura is expected to buy The Body Shop from L’Oreal for €1 billion and the deal is expected to close by the end of this year.
Natura is currently one of the largest beauty companies in Brazil that sells its products both through standalone stores as well as through direct-selling representatives. Besides Brazil, it has a wide presence in several Latin American countries including Argentina, Peru, Columbia, Chile, Bolivia, Mexico, as well as in France. With around 1.5 million sales consultants, Natura has surpassed the sales of the direct selling beauty company, Avon, in Brazil for over a decade. The Body Shop, on the other hand, has over 3,000 standalone stores in 66 countries. The Body Shop had been suffering from a steady decline in its sales over the last few years due to the dilution of its environment-friendly brand image and because of more powerful competitors in the natural beauty market. In 2016, its sales declined by 5% y-o-y to around €921 million and its operating profit declined by 38% y-o-y to €34 million. The joint entity of Natura and The Body Shop would churn out net sales of about €3.15 billion with a presence in around 3,200 stores across the globe.