BODY SHOP: IN SEARCH OF A CORPORATE PARENT TO REVIVE
THE BRAND CASE STUDY SOLUTION
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SYNOPSIS
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In early 2024, London, UK-based The Body Shop International Ltd. (Body Shop) filed for administration.2
Aurelius Group (Aurelius), a private equity firm, owned Body Shop and, soon after acquiring it, filed for
Body Shop’s bankruptcy.3 Experts have criticized private equity firms in general for destroying the value
n
of firms, especially in the retail industry.4 The FRP Advisory Group (FRP) led by Geoff Rowley, which
Aurelius appointed to oversee the administration, asserted that it was “exploring all options to take the
tio
business forward.”5 The British high-street fashion chain Next was intending to acquire Body Shop.6
Experts also recommended that Body Shop appeal to younger shoppers to compete with companies like
Lush and other competitors that offered a similar value proposition as Body Shop. 7 Should Rowley have
lu
considered selling the restructured Body Shop to Next or back to Aurelius? Which company could provide
better corporate parenting advantages? How could Body Shop be revived?
So
OBJECTIVES
• Explore possible sources of reviving a company.
• Critically analyze turnaround intentions of private equity firms in acquiring a poor-performing company.
• Examine reasons for the downfall of a company (i.e., why good companies go bad).
• Evaluate what kind of a corporate parent provides corporate parenting advantages.
The Case Solution Starts From page 4
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ASSIGNMENT QUESTIONS
1. What were the reasons for the demise of Body Shop?
2. Assess the strategic intentions of Aurelius for acquiring Body Shop and propose alternative strategies
lu
for restructuring the brand to ensure long-term viability.
3. Evaluate if L’Oréal and Natura &Co provided any corporate parenting advantage. Should FRP consider
So
selling the restructured Body Shop to Next or back to Aurelius? Explain using each firm’s ability to
provide corporate parenting advantages to Body Shop.
4. How could an acquirer of Body Shop revive the brand post-administration?
The Case Solution Starts From page 4
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2. Assess the strategic intentions of Aurelius for acquiring Body Shop and propose alternative
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strategies for restructuring the brand to ensure long-term viability.
m
Private equity firms like Aurelius earn money by buying companies, transforming them, and selling them
at a higher price. As a creditor to a distressed Body Shop rich in intellectual property (IP), Aurelius
protected its investment by seizing the IP and brand name of Body Shop before it filed for administration.
Sa
This process is a standard recommended practice for investors, allowing them to acquire a company’s IP
assets, especially when fully commercialized. When Aurelius signed the deal to purchase Body Shop, the
acquired firm’s UK and Canadian businesses were attractive. In 2022, Body Shop generated revenue of
US$515 million (see case Exhibit 1). In 2023, Body Shop UK posted profits of $24 million on revenues
n
of $207 million from its 198 stores in the UK. However, Body Shop took a series of loans from Aurelius
when Aurelius acquired it. It pledged some of Body Shop’s most valuable assets, including IP and
tio
valuable real estate, to its new owner. Therefore, Aurelius became both Body Shop’s owner and a
significant creditor. This was a standard practice by private equity firms to protect high-risk investments.
Aurelius accordingly ranked ahead of other creditors if the Body Shop ran in trouble. So, when Body Shop
lu
went bankrupt, then Aurelius claimed some of Body Shop’s assets such as IP.
So
While its investment into Body Shop was considered to hurt Aurelius’ reputation, according to research,
The Case Solution Starts From page 4
THE BRAND CASE STUDY SOLUTION
e
pl
SYNOPSIS
m
Sa
In early 2024, London, UK-based The Body Shop International Ltd. (Body Shop) filed for administration.2
Aurelius Group (Aurelius), a private equity firm, owned Body Shop and, soon after acquiring it, filed for
Body Shop’s bankruptcy.3 Experts have criticized private equity firms in general for destroying the value
n
of firms, especially in the retail industry.4 The FRP Advisory Group (FRP) led by Geoff Rowley, which
Aurelius appointed to oversee the administration, asserted that it was “exploring all options to take the
tio
business forward.”5 The British high-street fashion chain Next was intending to acquire Body Shop.6
Experts also recommended that Body Shop appeal to younger shoppers to compete with companies like
Lush and other competitors that offered a similar value proposition as Body Shop. 7 Should Rowley have
lu
considered selling the restructured Body Shop to Next or back to Aurelius? Which company could provide
better corporate parenting advantages? How could Body Shop be revived?
So
OBJECTIVES
• Explore possible sources of reviving a company.
• Critically analyze turnaround intentions of private equity firms in acquiring a poor-performing company.
• Examine reasons for the downfall of a company (i.e., why good companies go bad).
• Evaluate what kind of a corporate parent provides corporate parenting advantages.
The Case Solution Starts From page 4
, e
pl
m
Sa
n
tio
ASSIGNMENT QUESTIONS
1. What were the reasons for the demise of Body Shop?
2. Assess the strategic intentions of Aurelius for acquiring Body Shop and propose alternative strategies
lu
for restructuring the brand to ensure long-term viability.
3. Evaluate if L’Oréal and Natura &Co provided any corporate parenting advantage. Should FRP consider
So
selling the restructured Body Shop to Next or back to Aurelius? Explain using each firm’s ability to
provide corporate parenting advantages to Body Shop.
4. How could an acquirer of Body Shop revive the brand post-administration?
The Case Solution Starts From page 4
, e
2. Assess the strategic intentions of Aurelius for acquiring Body Shop and propose alternative
pl
strategies for restructuring the brand to ensure long-term viability.
m
Private equity firms like Aurelius earn money by buying companies, transforming them, and selling them
at a higher price. As a creditor to a distressed Body Shop rich in intellectual property (IP), Aurelius
protected its investment by seizing the IP and brand name of Body Shop before it filed for administration.
Sa
This process is a standard recommended practice for investors, allowing them to acquire a company’s IP
assets, especially when fully commercialized. When Aurelius signed the deal to purchase Body Shop, the
acquired firm’s UK and Canadian businesses were attractive. In 2022, Body Shop generated revenue of
US$515 million (see case Exhibit 1). In 2023, Body Shop UK posted profits of $24 million on revenues
n
of $207 million from its 198 stores in the UK. However, Body Shop took a series of loans from Aurelius
when Aurelius acquired it. It pledged some of Body Shop’s most valuable assets, including IP and
tio
valuable real estate, to its new owner. Therefore, Aurelius became both Body Shop’s owner and a
significant creditor. This was a standard practice by private equity firms to protect high-risk investments.
Aurelius accordingly ranked ahead of other creditors if the Body Shop ran in trouble. So, when Body Shop
lu
went bankrupt, then Aurelius claimed some of Body Shop’s assets such as IP.
So
While its investment into Body Shop was considered to hurt Aurelius’ reputation, according to research,
The Case Solution Starts From page 4
