Plans to close 33 stores and end e-commerce amid restructuring efforts
Body Shop Canada Ltd. has announced its decision to seek bankruptcy protection under the Bankruptcy and Insolvency Act, as reported by The Canadian Press.
The company, a Canadian subsidiary of the international cosmetics brand, plans to undergo a significant restructuring process.
This includes the closure of 33 of its 105 stores and the cessation of its e-commerce operations, affecting stores in major cities such as Toronto, Ottawa, Edmonton, Calgary, Saskatoon, and Saint John, N.B.
The specific number of job losses resulting from these store closures has not been disclosed. Financial difficulties are highlighted by the company's debt, which includes more than $3.3 million owed to unsecured creditors and approximately $16,400 to secured creditors.
Compounding these challenges, Body Shop Canada's US arm has also ceased operations.
These developments follow the filing for administration by the brand's parent company, The Body Shop International Ltd., in the UK, a move aimed at restructuring or winding down operations without settling debts.
This action has led to the planned closure of 75 stores in the UK and layoffs affecting 40 percent of its headquarters staff.
In Canada, Body Shop aims to maintain most of its stores operational. The company seeks the Ontario court's support to provide the necessary “breathing room” to explore strategic alternatives and proceed with its restructuring plans.
As part of this process, the company will stop accepting and selling gift cards, refuse refunds, and declare all purchases, new and previous, as final sales. These measures were detailed in a memo by Body Shop North America president Jordan Searle, sent to Canadian staff.
The restructuring efforts come as the company, known for its environmentally friendly ethos and diverse range of bath, body, hair, and skincare products, marks its 44th year in Canada. The Body Shop has faced increased competition from new entrants like Sephora, Bath & Body Works, and Lush, challenging its unique market position.
In response, Body Shop Canada introduced a “workshop” concept in some stores in 2022, focusing on sustainability practices and environmental and community activism. Additionally, it expanded its reach by selling products in Shoppers Drug Mart stores, marking a shift in its retail strategy.
The financial turmoil follows the sale of The Body Shop International to the Aurelius Group for £207 million ($355m) in the previous year.
The US division's memo revealed a centralized cash management system that led to a financial crunch, significantly impacting operations and vendor payments.
Despite requests for assistance, Aurelius Group did not respond, exacerbating the situation.
