A consortium led by British business tycoon Mike Jatania has agreed to buy The Body Shop out of insolvency.
The buyout of the stricken high street cosmetics retailer is expected to complete in the coming weeks, according to a statement made on Wednesday.
The Body Shop went into administration in February with the closure of 75 shops and the loss of 489 jobs.
Mike Jatania’s investment firm Aurea is leading a consortium bidding to takeover the struggling business.
Charles Denton, the former chief executive of beauty brand Molton Brown, is being lined up to head the management team.
The joint administrators of The Body Shop International and Aurea said: “While the deal is not yet complete, we believe the combined experience of the consortium, together with the existing management team, represents the best outcome for creditors and will ultimately ensure the long-term success of The Body Shop.
“A period of due diligence will now take place, with the intention to complete the transaction in the coming weeks.”
The administrators confirmed that no further statements will be made until the deal has been completed.
What went wrong for The Body Shop?
Reports started emerging in February that the household name was in financial trouble after trading during the vital Christmas period and into January was not as strong as had been previously hoped.
Administrators FRP added that the business had “faced an extended period of financial challenges under past owners, coinciding with a difficult trading environment for the wider retail sector”.
But according to an expert at AJ Bell, the company’s problems are longstanding and stem from its competitors also pushing their ethical values to the forefront of their marketing.
Investment analyst Dan Coatsworth said: “The Body Shop has been going through problems for some time, both operational and reputational.
“Best known for its physical stores, the company has arguably been overtaken by more nimble online sellers.
“The cosmetics sector is highly competitive and not everyone in this industry will prosper when the economy stalls, such as now.
“Previously known for its ethical stance, that halo is no long shining so brightly for the business. This is partly because so many companies have been pushing their ethical values which has meant The Body Shop has been lost in the crowd.
“There have also been suggestions it has been prioritising profits over principals, having gone through various owners over the past two decades.
“The brand feels dated and consumers have plenty of choice where they can buy cosmetics, skin care and perfume. It might still appeal to the older generations who remember the brand values, but younger people do not talk about The Body Shop as being a place they actively want to shop.
“If its stores are less busy, the tills are not ringing as fast as it wants, and the brand strength has weakened, it’s no wonder that The Body Shop’s UK operations have struggled.”