In a significant development in the beauty industry, Brazilian cosmetics giant Natura has finalized a deal to sell The Body Shop to Aurelius, a private equity firm. This move marks a notable shift for Natura, who acquired The Body Shop for a hefty €1 billion from L’Oréal in 2017, but is now selling it for an enterprise value of £207 million.

Natura, valued at $3.9 billion, has been retracting from its once-expansive global strategy. After acquiring The Body Shop and Avon Products, the São Paulo-based company is now refocusing. The Body Shop, established in 1976 by Anita and Gordon Roddick, has been a pioneer in ethical consumerism. With around 2,500 stores in over 70 countries, the brand is known for its cruelty-free and increasingly vegan products.

Aurelius, with a knack for revitalizing businesses facing challenges, sees potential in The Body Shop. Tristan Nagler from Aurelius, in a discussion with the Financial Times, expressed optimism about restoring the brand's former success. Aurelius’ strategy includes enhancing The Body Shop's online presence, a sector where the beauty market has lagged.

In recent times, The Body Shop’s financial performance under Natura has been underwhelming. In 2022, sales declined, and core profits were impacted by restructuring expenses. Natura’s tenure saw The Body Shop undergo brand rejuvenation and product portfolio overhaul. However, despite these efforts, the brand could not maintain its earlier momentum.

Fabio Barbosa, Natura’s recently appointed CEO, is steering the company towards a corporate revival, focusing on reducing debt by divesting business units. Earlier this year, Natura also sold Aesop to L’Oréal. The company is now concentrating on integrating its flagship brand, known for its sustainable Amazonian ingredients, with Avon's Latin American operations.

Despite a 30% rise in Natura's share price this year, the stock remains significantly below its July 2021 peak. This deal with Aurelius signifies a new chapter for The Body Shop, one that stakeholders and industry observers will watch with keen interest.

Sources: https://www.ft.com/content/f54b43b8-eb7d-4b47-a4b0-705747f31e30