L’Oréal explores sale of The Body Shop

By:

Add as a preferred source on Google

French cosmetics group L'Oréal is considering selling The Body Shop for €1bn (£851m), according to reports.

L'Oréal acquired The Body Shop 11 years ago for £652.3m, but is now working with bankers at Lazard to sell the struggling skincare range, according to the Financial Times.

It is thought Lazard and L'Oréal are exploring various options for the future of The Body Shop, but that a sale is the most likely option.

Read more: Why the UK is falling out of love with fashion

The group is expected to announce the sale when it reports its fourth quarter and full-year results on Thursday. 

Analysts at Berstein expect the company report that like-for-like sales at The Body Shop – which has over 3,000 stores in 66 countries – have grown by four per cent in the fourth quarter. 

However, for the full year, it is thought sales at the British high street brand grew by just 1.7 per cent on a like-for-like basis, as compared to group sales growth of 4.6 per cent.

Andrew Wood, senior research analyst at Bernstein, said L'Oréal is currently benefiting from the boom in beauty sales, due to the rise of social media – and particularly Instagram, where celebrities and brands sell make up products.

However L'Oréal's prospects were "average", Wood said, "and not strong enough to justify the current premium valuation".