Next eyes some Body Shop assets

Acquisitive UK retail giant Next is reportedly interested in acquiring certain assets of The Body Shop following its still-new German owner having put the chain into administration after discovering that the business was in a worse shape than it believed.

Sky News — which has a good record of getting it right on retail acquisition stories — said Next has approached administrators at FRP Advisory about a potential deal to acquire “assets as part of any sale process it decides to launch”.

But the report also said that there are doubts about whether FRP will run a conventional auction and that “contact between FRP and Next had already stalled”.

It also said that Next has been eyeing the business for some time.

Next is well known as a serial acquirer of both distressed and buoyant assets and in recent periods has bought control of Reiss, Fat Face, Joules, Made.com, Cath Kidston and JoJo Maman Bebe, as well as striking partnership deals with Laura Ashley, Victoria’s Secret and Gap.

A major stumbling block for Next in any ambitions it has around The Body Shop would be the fact that the brand and intellectual property assets aren’t part of the administration process and are controlled by Aurelius, which bought the business for £207 million just months ago. The German private equity company is also a major creditor of The Body Shop and is in a strong position when the ultimate fate of the business is decided.

Sky said that FRP will decide whether an auction is the way forward “within weeks” and that “a sale of the restructured business in its new form back to Aurelius [is] a possibility”.

It added that Next would be unlikely to retain “many, if any” of The Body Shop’s British stores if it did manage to buy the business. That would be a blow to staff after it has already been announced that almost half of its 198 UK stores are to close.

But a closure of the remaining stores wouldn’t come as a surprise given the challenges ahead in returning the business to profitability.

None of the parties involved have commented on the report.