The L’Oreal-owned Body Shop says that the 51% share in the business now gives it a firm footing in the fast-growing Brazil market, which until now has illuded the company due to stringent regulations governing domestic and international businesses in the country.
Perhaps more importantly for the company’s ambitions in the country for the future, the deal also gives the Body Shop the option to increase its share of the business to 80% by 2019, according to the terms of the contract, which were drawn up in October of this year.
Is The Body Shop’s potential about to be fulfilled?
The Body Shop is one of L’Oreal’s biggest retail arms, but since it was acquired from company founder Anita Roddick back in 2006 for £652m, it has failed to perform with the same kind of growth it had recorded in the earlier years of the business.
Right now, the business has over 2,600 retail outlets in well over 65 countries, but since L’Oreal took over the business there has been very little in the way of geographic expansion.
In the Americas, the business is only represented in Canada, Mexico and the United States, so the move into Brazil is a significant one as it is the first footprint for the Body Shop in the fast-growing South American market.
First footing in Brazil for The Body Shop
The acquisition means that L’Oreal will now be able to sell Body Shop products through the Emporio Body Store chain in Brazil, where it has not previously been able to set up any franchises due to competition and licensing laws.
The deal will see The Body Shop products available throughout the Emporio Body Store retail chain, while L’Oreal says that it will also be complemented by new products developed locally by its research and development team in Rio de Janeiro.
The fact that L’Oreal has not been able to establish the Body Shop brand in this particular fast-growing market for cosmetics and personal care products has been a source of frustration for the company because of the fast economic growth experienced in Brazil as a whole, and more specifically in the cosmetics and personal care category.
Emporio Body Shop CEO remains in charge
The deal will see Emporio Body Store CEO Tobias Chanan remain at the helm, and he will continue to oversee the group’s ambitions for further expansion in Brazil.
In 2012 the Emporio Body Store chain had 84 retail points throughout the country and had a turnover of approximately $9 million. This represented significant growth from 2010, when the business had 36 points of sale in the country.
The beauty retail chain’s aggressive growth path has continued throughout 2013 with the opening of a series of new sale points, which should see a projected total of 130 points of sale by the end of the year.