Cosmetics retailer The Body Shop is closing stores in the US and Canada

Cosmetics retailer The Body Shop has closed all of its U.S. stores and is shutting down about a third of its stores in Canada, CNN reports. This decision was made after the British retailer filed on March 1 statements about bankruptcy in these countries. There are also reports of serious problems at the Australian division of the chain, which is a pioneer and benchmark for so-called ethical business.

The American division of The Body Shop ceased operations on March 1. Last Saturday, the company filed for insolvency, according to which the assets of The Body Shop US will be sold off to cover accumulated debts. In Canada, the company launched liquidation sales in 33 of its 105 operating stores. All of them continue to operate for now, but online sales of The Body Shop products have been discontinued.

The Body Shop has struggled in recent years, unable to recover from falling sales amid the COVID-19 pandemic.

Last November, the cosmetics brand was bought from the Brazilian Natura by the German investment fund Aurelius for just £207 million. However, in mid-February, the fund announced that it would not be able to revive the once successful business, the decisive factor being extremely weak sales during the Christmas holidays and New Year. At the same time, it became known that the parent company, registered in the UK, was transferred under external management to the consulting firm FRP Advisory. And at the end of February it was announced that the chain was closing 82 of its 198 stores in Britain.

Divisions of The Body Shop in Germany, Denmark, Ireland and Belgium have been declared insolvent.

In addition, it reports The Guardianthe Australian division of The Body Shop may soon file for insolvency, which, despite having a profit, cannot pay suppliers and partners for services provided during the Christmas season.

According to the newspaper’s sources, the money earned by the foreign divisions of The Body Shop in November-December last year was sent to the head office in the UK. And after it came under external control, all subsidiaries lost access to these funds. FRP Advisory clarified that the fundraising was carried out before the parent company was transferred under external management. After this, the funds earned by the units remained with them. But, according to The Guardian, the amount of funds remaining in the accounts of foreign units is disproportionate to their debts.

Kirill Sarkhanyants