Body Shop turns the corner

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UK-based Body Shop has upped its expectations for the coming
financial year on the back of full-year results revealing a trading
come-back. Growth had come on a global basis thanks to a successful
investment programme to enhance the company's image and
logististics, reports Simon Pitman.

At the end of last week the company announced full-year results that showed total sales for the 12 months ending 26 February were up 5 per cent from £381.1 million in the previous trading year to reach £419.0 million.

But perhaps more important was the fact that pre-tax profits were well up on the previous year - £34.5 million, compared to £28.5 million during 2005, revealing a leaner but more profitable business operation.

Adrian Bellamy, Body Shop​ chairman, said that growth had come from all four regions, attributable to its £100 million investment programme, which has included a new store format, new branding, expansion of its e-commerce division as well as an improved marketing and merchandising strategy.

Part of this year's investment programme will be devoted to an accelerated new store opening programme, which is also expected to help fuel further growth this year.

On the basis of the continued benefits of its investment programme the company estimates that it will exceed earnings expectations by between 15 and 20 per cent - a move that some analysts called 'brave' considering how early on in the financial year it still is for the company.

Analysts at the Financial Times said: "These results show that The Body Shop is back in shape after having let itself go and are particularly impressive given the recent warnings from high street retailers and its previous problems.

"The potential to ramp up sales from refitting the existing store portfolio, which largely pretty tired, is good, while the overseas markets look very attractive. But the Group is not having it all its own way, with the weak dollar lopping £3.1 million from last year's profit."

On a regional basis Asia Pacific led the way with sales growth coming in at 12 per cent, due in part to a big jump in internet sales. The US registered 7 per cent growth, due largely to a 57 per cent increase in internet sales, while Europe grew by 4 per cent, where internet sales have not yet been launched.

Flagging retail sales in the UK and Ireland were counteracted by a jump in internet sales, leaving total sales unchanged for the year-on-year.

"Through strong expansion of the Body Shop At Home e-commerce the company continues to acheive strong growth that will be extended into new markets,"​ Bellamy said in a statement.

"Our new e-commerce business in the USA preformed well ahead of expectations in its first few months of trading and sales are expected to more than double this year. We will build on this experience to broaden e-commerce coverage into other key markets over the next two years."

With internet sales now starting to kick in for the company and the effects of restructuring also being felt, Body Shops forecasts for the year could prove to be realistic if current conditions prevail.

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