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Finance & Investment
The Body Shop Finds New Home in Purpose-Driven Cosmetics Giant, Natura

Earlier this week, French beauty giant L’Oréal announced that it has concluded the sale of The Body Shop to Brazilian sustainable personal care group Natura Cosmeticos.

Earlier this week, French beauty giant L’Oréal announced that it has concluded the sale of The Body Shop to Brazilian sustainable personal care group Natura Cosmeticos.

Natura’s acquisition of the UK-based natural beauty brand is part of a broader strategy to become a global, purpose-driven multi-brand and multichannel cosmetics group. It brings together under one roof Natura, The Body Shop and Aesop, three pioneering brands with strong identities that share a commitment to sustainable and ethical business practices. The three companies are committed to generating positive economic, social and environmental impact through actions such as developing vegetable-based products, using traceable and sustainably sourced ingredients, innovating in packaging, promoting fair trade with suppliers and rejecting animal testing.

The combination will result in a group with retail revenues of $6.0 billion, EBITDA of $467 million, an EBITDA margin of 14 percent, over 18,000 employees and a presence in 69 countries.

In 2016, to mark its 40th anniversary, The Body Shop unveiled an ambitious global CSR strategy, called 'Enrich Not Exploit,' that underpins all aspects of company operation. The commitment involves an extensive program of global activity and measurable 2020 targets that touches all areas of the business, and reaffirms the company's goal to be 'the world’s most ethical and sustainable global company.' Enrich Not Exploit will see The Body Shop committing to protect and nurture the environment and society across every part of its business: ingredients, products, packaging, stores, employees, suppliers and campaigns. The Body Shop worked with the Future Fit Foundation to set and shape the company’s seven long-term sustainability goals.

Sustainable Brands spoke with Christopher Davis, International Director of Corporate Responsibility and Campaigns at The Body Shop, to learn more about what the sale could mean for the company’s sustainability efforts going forward.

“The businesses are very different – L’Oréal talks a lot about sustainability, they invest a lot of resources into it – but the founding philosophy of Natura is built on the idea of providing for all stakeholders. When they founded the business 45 years ago, that was one of the things that was precious to them and is still now – the same way that The Body Shop was founded on similar principles – the DNA is one of the reasons why it’s a better home for us," Davis said. "Also, I don’t think this has ever happened before - they’ve created this group, the three brands – Natura, Aesop and TBS – all committed to the triple bottom line, all of whom will measure their success as a triple bottom line company. It’s the kind of home [The Body Shop founder] Anita Roddick would’ve been proud of.”

As for what the acquisition could mean for The Body Shop’s sustainability efforts going forward, Davis is excited about the opportunity for the companies to join forces.

“It’s early days, but the 14 Enrich Not Exploit targets that we’ve set out – all of those are very much aligned to the way Natura does business, as well as being aligned to the Future-Fit Benchmark, so I’m pretty sure that we’ll stay with those and continue to push forward,” he said. “The Future-Fit work that we’ve done, in my opinion, is the best there is, and I’m really excited about sharing that with the leaders of Natura. We built our plans for true sustainability around the Future-Fit Benchmark and we’re excited about sharing that with Natura, because I think Natura might also find some things that we’ve been doing helpful to them.

“I think the more exciting question that I’ve asked myself is, to be a member of this group of brands under this group of founders - how does it affect our goal of being truly sustainable? I think that’s what’s most exciting, because Natura has published commitments to 2050, which really are groundbreaking and are close to our own philosophy of true sustainability. I’m excited – I think together we can really drive the idea of true sustainability, of zero harm to environment.”

Natura Group has instated a new governance and management structure to ensure seamless execution and integration, including the appointment of Marques, former EVP and President North America for Mondelez International, as Executive Chairman of the Board to support the company’s Board of Directors in implementing Natura Group’s global vision and strategy and supervising the three brands and businesses. Each of the three brands and companies will have its own CEO and Executive committee, ensuring full autonomy.

Through a combination of improved operational efficiency in the short term and topline growth in the medium term, the new Natura Group intends to double The Body Shop’s 2016 EBITDA of $82 million by 2022, while increasing EBITDA margin from its 2016 level of 8.4 percent to between 12 and 14 percent. The group also intends to pursue additional synergies through stepped-up direct selling in Latin America, accelerating the international growth of the Natura and Aesop brands, benefitting from efficiency and scale gains, gaining access to a global supply chain and capitalizing on currency and geographic diversification.

Natura Group will make a more detailed strategic and financial presentation to the market in February 2018.