The exterior of a Toronto Body Shop store is seen on Monday, March 4, 2024. THE CANADIAN PRESS


April 20, 2024

TORONTO - The Body Shop Canada is contemplating a sale due to inventory challenges following a surge in sales after announcing plans for creditor protection and store closures. In an affidavit filed on April 8, the head of the Canadian operations, Jordan Searle, mentioned sufficient interest from potential buyers.

However, he did not disclose the interested parties. The decision to explore a sale comes after the retailer's parent company, The Body Shop International, filed for administration in the U.K. Searle alleged in court documents that the parent company, along with its owner, European private equity firm Aurelius, had drained funds from the Canadian arm, leading to its financial distress and creditor protection filing.

The intertwined nature of the Canadian, U.S., and British businesses through a cash pooling arrangement has exacerbated inventory shortages in Canada. The closure of 33 stores further strained the remaining 72 stores, despite exceeding sales projections by $5.4 million.

To address inventory issues, The Body Shop Canada is considering purchasing goods from the parent company's U.K. warehouse and the U.S. distribution center. However, logistical challenges arise, as the individuals responsible for inventory handling were previously employed by The Body Shop U.S. The company has applied for an extension until May 31 to file a creditor protection proposal, allowing time for inventory replenishment efforts and negotiations with stakeholders. Currently, The Body Shop Canada employs 570 individuals, with no plans for further layoffs.

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