Sales slide sees Body Shop slip into red

Toiletries and make-up group Body Shop International today reported a tumble into the red, as it showed a slip in sales and heavy costs had hit figures.

The group, famous for its environmentally-friendly stance, said sales had been hurt by tougher trading conditions in Europe and the US.

Like-for-like sales for the six months to August 31 were down 1% on the same period last year, while in the UK and Ireland, where the group has 319 shops, sales showed a 3% slide.

Body Shop said the fall was partly due to de-stocking its old make-up range ahead of launching new products, while figures were also affected by the group having a smaller summer sale this year.

The sales decline contributed to half year pre-tax profits before one-off costs sliding to £2.5m (€3.98m) from £3m (€4.78m) for the same period the previous year.

However, one-off costs pushed the group £700,000 (€1.1m) into the red, compared with £2.6m (€4.1m) pre-tax profits last time.

The charge related to costs of exiting from Botanicus, its natural products retail partnership, as well as redundancy costs.

Over the last six months Body Shop has cut 116 staff.

However Body Shop was upbeat about the future, saying like-for-like sales for the first five weeks of the new financial year were up 3%, although the comparisons were distorted by the impact of the September 11 terrorist attacks.

Body Shop said sales in the UK had benefited from the launch of a new make-up range, although the group was still seeing tough trading conditions in the US.

Chief executive Peter Saunders said: “Our outcome for the full year is, as always, dependent on trading during the Christmas period, but we continue to believe that there will be an improvement in performance over last year.”

Mr Saunders took over as chief executive in February, along with executive chairman Adrian Bellamy.

The change followed the decision by Body Shop’s co-founders Anita and Gordon Roddick to take a back seat.

The new management were charged with turning around the group, which had suffered from falling sales after losing out to rivals developing similar products to its own.

Body Shop issued three profits warnings in the 18 months before the management reshuffle, which also followed the collapse of takeover talks with Mexican firm Omnilife.

Analysts today said management still had work to do.

Rhys Williams, analyst at Seymour Pierce, said: “Overall the new management team has its work cut out turning round Body Shop.

“However, with such a large international store base and work being done to reduce overheads and improve the company’s operations, the group is moving in the right direction.”

Shares in the group were flat at 103.5p. The interim dividend is 1.9p, the same as this time last year.