The deal will see L’Oreal take a 51% majority stake in the business, with a view to increasing that stake to 80% by 2019 if the company reaches its objectives. It also gives The Body Shop brand an important first footing in the market.
Although the exact terms of the deal were not revealed, L’Oreal has said that the deal is expected to be closed by the end of the year, subject to the approval of the Brazilian Anti-Trust Authority.
The acquisition means that L’Oreal will now be able to sell Body Shop products through the Emporio Body Store chain in the country, where it has not been able to set up any franchises yet 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.
First steps towards a footing in Brazil for The Body Shop
Currently the Body Shop has over 2,600 retail outlets in more than 65 different countries, but the fact it 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.
The Brazil market has enjoyed continued economic growth in recent years, and this has translated into increased average household incomes which has led to significant growth in the country’s cosmetics and personal care market, now placing it as the fourth largest in the world.
“We are looking forward to introducing The Body Shop products to discerning Brazilian consumers who appreciate naturally inspired, sensorial products,” said Jeremy Schwartz, chairman and CEO of The Body Shop.
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.