British cosmetics company The Body Shop has shut down all stores in the US and about one-third of its outlets in Canada after filing for bankruptcy in the two markets.
The firm’s US arm has ceased operations at all 50 stores and filed for Chapter 7 insolvency, under which assets are sold off to clear debts, putting about 400 jobs at risk, The Guardian reported.
In Canada, 33 of the 105 shops have closed, affecting more than 200 jobs.
In addition, the company is reportedly struggling to pay suppliers in Australia, where it operates almost 100 stores and is responsible for more than 20 more in New Zealand. Sources told The Guardian that the business could cover its day-to-day expenses from cashflow but would need additional funds to cover debts to suppliers such as logistics firms, warehouses and marketing agencies.
The Body Shop’s overseas businesses have been facing cash shortages after its UK parent collapsed into administration in February. Pan-European alternative investment firm Aurelius, which bought the company for £207 million ($265 million) in November, cited a dismal trading over Christmas and New Year.
FRP Advisory – the UK arm’s administrators – has so far announced the closure of more than 80 of the retailer’s 198 UK stores, while about 300 jobs have been cut from its head office.
It is understood that the North American and Australasian businesses are now counted as creditors to the parent company and may have to wait months for any payment via FRP.
According to Retail Gazette, HMV owner Doug Putman is reported to have registered his interest in buying The Body Shop with the firm’s administrators, but has yet to table a formal offer.
