The Body Shop, a well-known UK-based cosmetics company, has recently filed for bankruptcy in the United States and Canada. This move comes after the company's UK parent collapsed last month, leading to cash shortages that have affected its most profitable overseas businesses.
The insolvency proceedings under Chapter 7 in the US will result in the liquidation of the company's assets to pay off debts, while in Canada, the process is governed by the Bankruptcy and Insolvency Act.
Approximately 400 jobs are at risk due to this development. The Body Shop's US arm has already ceased trading at its 50 outlets, and all US-based operations have been shut down as of March 1, 2024. In Canada, The Body Shop is closing 33 stores and has ended online sales.
Despite having a presence in over 80 countries with more than 2,500 retail locations, the company's inability to adapt to changing consumer habits and the competitive landscape has led to this unfortunate outcome.
The reasons behind The Body Shop's bankruptcy include difficulties in paying suppliers, which resulted in the loss of access to its e-commerce platform and the ability to ship to wholesale partners such as Amazon.
The economic turbulence post-Covid-19 pandemic, high inflation, recession, and massive job losses in 2022 and 2023 have also contributed to declining consumer spending on non-essential items like cosmetics. Moreover, the company's heavy reliance on brick-and-mortar stores made it challenging to compete with online retailers.
Founded by human rights activist Anita Roddick, The Body Shop was one of the first cosmetic companies to prohibit animal testing on products. However, despite its ethical stance and historical significance, the company's failure to keep up with evolving consumer preferences and economic conditions has led to its current predicament.
