A Body Shop store in Toronto displays a sale sign in its window on Friday. It's one of the 33 stores that the cosmetics company will sell as it files for creditor protection. (Victoria Grace Stunt/CBC)
The Body Shop Canada has made the decision to close approximately one-third of its stores and discontinue online sales as it files for creditor protection, the Canadian arm of the U.K.-based beauty and cosmetics retailer revealed on Friday.
According to a court filing, the company owes over $3.3 million to unsecured creditors and about $16,400 to secured creditors. The exact number of employees affected by the closures across various cities, including Toronto, Ottawa, Edmonton, Calgary, Saskatoon, and Saint John, has not been disclosed by the company.
In a press release, the company expressed hope that the Ontario court proceedings would provide it with the necessary "breathing room" to assess strategic alternatives and engage in restructuring efforts. As part of the restructuring, the company will discontinue the acceptance and sale of gift cards, and all purchases, both past and future, will be considered final.
This decision follows the acquisition of The Body Shop International by a private equity firm, which resulted in the company being placed into administration last month, allowing for potential restructuring or wind-down without immediate debt obligations.
The closure of the online store has come as a surprise to industry experts, including Craig Patterson, the founder of Retail Insider, who noted that it could adversely affect consumer access to The Body Shop's products, especially considering the increasing importance of e-commerce in retail.
Over the years, The Body Shop has carved a niche for itself in the cosmetics retail market by championing ethical and environmentally friendly practices. However, as per Lianne Foti, an associate professor at the University of Guelph, the market has become more saturated with brands offering similar ethical and sustainable alternatives, making it harder for The Body Shop to stand out.
Although The Body Shop Canada still operates 105 stores nationwide, the closure affects 33 locations listed across Ontario, Alberta, Saskatchewan, British Columbia, New Brunswick, Nova Scotia, Manitoba, and Newfoundland and Labrador, which will begin liquidation sales immediately.
