Body Shop landlords face rent cut demand

ADMINISTRATORS running The Body Shop are expected to demand rent cuts from its landlords as they race to secure a future for the collapsed business.

Insolvency experts at FRP Advisory are putting together plans for a company voluntary arrangement (CVA) in which property owners accept lower payments so the beauty chain can escape administration.

If an agreement can be reached, it would mean the company is able to continue trading without putting its remaining assets up for sale.

Landlords at the time of collapse included Land Securities Group, Network Rail and Nuveen Real Estate, one of the largest investment managers in the world, as well as the shopping centre owner Hammerson.

CVAs became common during the pandemic when retail outlets and restaurants were forced to shut because of lockdown restrictions.

If a CVA cannot be agreed with The Body Shop’s creditors, administrators will explore a sale of the business. The Body Shop was put into administration in February by its owner, the private equity firm Aurelius, just weeks after being acquired in a £207m deal from Natura.

Since then, dozens of stores have been forced to close, causing the loss of hundreds of jobs.

More than 80 of the chain’s shops have closed, including The Body Shop’s Oxford Street site. It has 116 sites still open across the UK.

In a message to creditors, first reported by Sky News, FRP said: “Following the completion of the acquisition it became apparent that the short-term cash position of the company was adverse to what had been forecast, driven by poor results in the 2023 financial year and the unwinding of the company’s working capital.”

Aurelius had expected the chain to require £63m in funding after the acquisition, but that figure rose to north of £100m, “significantly greater than the requirement identified as part of the acquisition process”, it added. It is understood there will be no further store closures if a deal can be struck.