L’Oréal’s potential The Body Shop sale: analyst’s take
Natura Cosméticos is a Brazilian manufacturer and marketer of beauty products, household, and personal care, skin care, solar filters, cosmetics, perfume and hair care products.
L’Oréal is said to be fairly certain to complete the sale of The Body Shop to the company, rumored to be valued at EUR 1 billion, with CEO Jean-Paul Agon having described Natura as the brand’s ‘new home’.
Hannah Symons, beauty and personal care analyst at market research provider Euromonitor International, gave the firm’s perspective on the deal.
Joining Aesop in the portfolio
“The prospect of Natura Cosmeticos acquiring The Body Shop makes sense in the context of Natura’s existing portfolio and its shared values. Upon purchasing Aesop in 2012, Natura has facilitated the sustained growth of the brand’s best-in-class, mono-brand retail strategy,” the analyst suggests.
“Building on this experience, Natura opened its first own physical store in Sao Paulo in 2016, a radical move considering that direct-selling has historically strongly underpinned the company’s DNA.
“This was a clear signal of a change in retail tack for the company, which is why the acquisition does not come as a surprise,” Symons asserts.
The analyst notes that a shared ‘green beauty’ profile makes The Body Shop and Natura a good fit.
“Likewise, The Body Shop being a pioneer of ethical sourcing and social responsibility in the beauty and personal care industry makes it a perfect match for Natura’s green approach to production and plant-based heritage. These shared values will help nurture the defining integrity of The Body Shop on an even greater global stage.”
A crucial moment
The sale comes at the ideal time to maximise on shifting consumer behaviours, Symons suggests.
“This comes at a crucial time when many consumers are redefining their priorities and ethical consumption is topping agendas,” she notes.
Symons also suggests that the sale will open up new target markets and regions for The Body Shop.
“Whilst the majority of The Body Shop’s 2016 sales came from developed markets, Natura’s strength lies in the emerging regions, account for 98% of its value in 2016. Undoubtedly this exposure will provide a necessary springboard for The Body Shop to expand further into valuable emerging territories to help revive growth.”
The broadening of Natura’s portfolio with the acquisition of global The Body Shop seems a savvy move, Symons concludes.
“In this case the acquisition would be a happy marriage; reducing Natura’s reliance on Brazil, whilst mitigating The Body Shop’s risk in stagnating developed regions.”
