Body Shop Canada eyes sale as demand outpaces inventory

The Body Shop Canada is exploring a sale as it struggles to get its hands on enough inventory to keep up with “robust” sales the retailer landed after announcing it would file for creditor protection and close 33 stores.

In an April 8 affidavit filed in a Toronto court on Monday, the head of the retailer’s Canadian operations said he has seen a “sufficient level of interest” in the business from parties to believe the company should pursue a sale.

Jordan Searle did not name who is interested in buying the skin care and cosmetics business that has been in Canada since 1980. He and the company’s lawyers did not respond to a request for comment.

Exploration of a sale marks the latest chapter for the beleaguered retailer, which announced plans to seek creditor protection at the start of March when its U.S. affiliate Buth-Na-Bodhaige Inc. also revealed it would close.

Parent company The Body Shop International, filed for administration — a form of creditor protection — in the U.K. on Feb. 13.

In the affidavit, Searle said it’s unclear whether the parent company would support a sale or try to preserve the retailer’s Canadian operations. A communications firm used by the company’s joint administrators in the U.K. said the business would not comment.

Searle previously alleged in court documents that the parent company and its owner, European private equity firm Aurelius, of stripping the Body Shops’ Canadian arm of millions in cash and pushing it into debt, which forced it to file for creditor protection.

The Canadian, U.S. and British businesses are tightly intertwined through a cash pooling arrangement, in which The Body Shop Canada’s funds were regularly sent to the parent company, which then took care of the Canadian arm’s rent and payroll obligations.