Body Shop in negotiations to get ownership makeover

"They probably need some new blood. It won't necessarily be a bad thing for this to happen," said Ms. Atkinson. She said since BSI has been so heavily involved in supplying the Canadian operations' products, customers likely won't see any dramatic differences.

The Globe and Mail
June 25, 2004

Body Shop in negotiations to get ownership makeover
Richard Bloom

The owners of venerable cosmetics-with-a-conscience retailer Body Shop Canada are in "advanced negotiations" to sell their privately held company to London-based Body Shop International PLC (BSI), with a final deal expected in less than a month.

The development comes five years after owners first informed franchisees and staff that they were contemplating retirement and, in turn, pondering the sale of the chain.

Co-owner Margot Franssen said in an interview from her Toronto office that while the deal is not a fait accompli, she expects the sale to go ahead and an announcement from BSI detailing financial terms to be made by July 15.

"Things can always fall apart but we've been working at this for a while," Ms. Franssen said.

"And it's not like we're dealing with people that don't know us pretty well. So, we're all pretty confident."

Formal negotiations began 10 months ago when the company hired a lawyer to look for a buyer, Ms. Franssen said. Under terms of its existing pact with BSI — which allows the Canadian company exclusive rights to the trademark and its products — the British company had right of first refusal should Ms. Franssen and her two partners decide to sell.

Privately held Body Shop Canada is co-owned by Ms. Franssen, 52, her husband, Quig Tingley, 58, and her 43-year-old sister Betty-Ann.

The trio launched Body Shop Canada in 1980, opening their first store underneath a delicatessen in Toronto's trendy Yorkville neighbourhood — 69 Yorkville, to be precise.

"With a name like The Body Shop, at 69 Yorkville, you can imagine the telephone calls we used to get, my god."

Nearly 25 years later, the company has 113 stores scattered across Canada, 1,200 employees and annual sales of more than $115-million. About 75 per cent of its stores are franchised while the remaining lot are corporate-owned. The corporate stores are in southwestern Ontario, Toronto, Vancouver and the massive West Edmonton Mall.

No Canadian store closings are planned should the deal go through, the companies said.

BSI founder Anita Roddick opened the first Body Shop in England in 1976. It has since grown into a global chain, promoting socially and environmentally conscious products, with more than 2,000 outlets in 50 countries. (In February, 2002, Ms. Roddick and her husband, Gordon, stepped down as co-chairs of the company after the company spurned several takeover bids. They remain on as non-executive directors.)

"The [owners] have built The Body Shop Canada over 20 years into a high-quality company creating one of Canada's strongest retail brands," BSI chairman Adrian Bellamy said in a statement.

"The company also has a strong track record in corporate social responsibility. Its high-profile stance against domestic violence inspired BSI to launch a global campaign to 'Help Stop Violence in the Home'. If we proceed to purchase, BSI plans to build on these great foundations and further develop the brand in Canada."

The deal is well timed for the Canadian owners, according to Maureen Atkinson, a senior partner at retail consulting firm J.C. Williams Group in Toronto. She said the owners have been working in the "very time-consuming" retail industry for two decades and probably felt it was time to cash out.

Also, she said that in the 1980s, Body Shop was doing something very different. Now, the retailer has to battle similar offerings on the shelves of Shoppers Drug Mart Corp., Wal-Mart Canada Corp., Costco Wholesale Canada Ltd. and Loblaw Cos. Ltd. — all of which have dipped into beauty products made from natural ingredients.

What's more, she said upscale cosmetics chain Sephora — owned by luxury goods powerhouse LVMH Mo√ęt Hennessy Louis Vuitton — is about to open its first specialty store in Canada later this year, which will further chew into market share.

"They probably need some new blood. It won't necessarily be a bad thing for this to happen," said Ms. Atkinson. She said since BSI has been so heavily involved in supplying the Canadian operations' products, customers likely won't see any dramatic differences.

In 2002, when word first surfaced that Body Shop Canada might be putting itself up for sale, some industry observers said the chain needed "new energy" and that it was "stuck in the eighties."

Margot Franssen said BSI is looking forward to regionalizing its operations in North America, hoping to combine the U.S. and Canadian chains into one unit to use identical products and marketing.

Meanwhile, she admits that owning the company has been an incredible experience. The owners received the Order of Canada in 2003 and the United Nations' Grand Award in 1995 for the company's various campaigns to stop violence against women.

She also said that after such a lengthy period at the helm, letting the company go is bittersweet. She said she broke into tears when telling her staff the news yesterday.

"It's incredibly sad," she said, adding that while she looks forward to retirement, she will remain busy. She is currently the co-president of the Canadian Women's Foundation, on the York University Foundation's Board of Governors and is a director with Canadian Imperial Bank of Commerce.

She's also looking forward to spending quality time with her husband — outside of the office. Her three teenage children will be moving out of their house this fall (two are going to boarding school and one is at university in Halifax).

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