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Lush: The Body Shop is not fitting L’Oreal’s 'profit profile'

By Michelle Yeomans , 09-Oct-2012
Last updated on 20-Dec-2012 at 12:28 GMT

Mark Constantine, founder of The Body Shop’s rival - Lush Cosmetics - has been making waves in the industry after stating that an inside source told him that the chain was being groomed for sale.

According to the 'This is Money' financial website, Constantine said that “he had spoken to a Body Shop source who told him the business no longer fitted L’Oreal’s strategy.”

The site further quoted the Lush founder as saying that the chain; “doesn’t fulfil L’Oreal’s profit profile,” and that “they [L'Oreal] always get rid of businesses that perform averagely. I don’t know what it will sell for, but it will certainly be for less than they paid.”

Constantine tried to buy The Body Shop back in 2001, and his company is well known to be the main rival of the conglomerate, which makes this publication question the authenticity of his statement.

So, Cosmetics Design further contacted Constantine’s office for a statement on the matter but found he was unavailable for comment at the time of publishing.

Meanwhile, a separate report by ‘Retail Week’ has stated that The Body Shop is infact in negotiations about a takeover bid that could be worth more than £350m (€432m). “Adrian Bellamy, the US business partner of founder Anita Roddick, is believed to be in talks with private equity firm Texas Pacific.”

No truth in the rumour”

Despite the ongoing media furore, a Body Shop representative has since said that “There is absolutely no truth in the rumour that L'Oreal intends to sell The Body Shop."

Whilst further pointing to an interview with Jean-Paul Agon, L'Oreal CEO in The Financial Times last month who then, denied any intention to sell, adding that "The Body Shop is a kind of treasure that we are very happy to have."

“A treasure”

In 2006, the France based giant acquired The Body Shop, in an effort, it said to break into new ground as the brand-owner of a business revered for its ethical values.

The deal saw L'Oreal pay a total of £652m (€807m) for a deal that secured a majority stake.

"A partnership between our companies makes perfect sense," said Sir Lindsay Owen-Jones, then L'Oreal CEO, "Combining 'Oreal's expertise and knowledge of international markets with The Body Shop's distinct culture and values will benefit both companies."

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