By  on January 7, 1994

LITTLEHAMPTON, England -- The Body Shop International, which pioneered the retailing of environmentally conscious cosmetics in the Seventies, is undergoing a major reexamination to make sure its concept has staying power.

The 1,031-store chain continues to see profit and sales growth in newer markets like the U.S., Continental Europe and the Far East. But results in the U.K. sagged last year under the strain of burdensome overheads, the recession and increased competition.

Body Shop had a 16.4 percent rise in after-tax profits to $9.6 million (6.4 million pounds at current exchange rates) worldwide on a 23.2 percent increase in sales to $124.2 million (82.8 million pounds) in the first half ended Aug. 30.

Its growth was fueled by a 62.5 percent rise in U.S. operating profits, but U.K. profits also rebounded following a 32 percent fall for 1992. The warning light for Body Shop, though, is that its comparative-store sales in the U.K. fell 5 percent in the first half after a 6 percent drop in 1992.

The U.K. accounted for about 39 percent of operating profits and 52 percent of sales in the first half. Despite the slowdown here, Body Shop remains one of Britain's most successful retailers, with sales per square foot of $1,102.50 (735 pounds), according to analysts.

Body Shop now sees itself as a "mature retailer" in the U.K. and has been taking steps to adapt to middle age. These include:

  • Recruiting Geoff Marshall from the London-based Conran Shop, where he was merchandising director, to become managing director of its U.K. division last fall.

  • Slashing overheads by consolidating sites in the U.S. and curtailing new store openings.

  • Trimming capital expenditures to $15 million to $18 million (10 million to 12 million pounds) from $75 million to $90 million (50 million to 60 million pounds) a year.

  • Improving its visual merchandising in stores.

  • Reviewing its products to determine where there are gaps and whether it might generate more retail sales with fewer product lines.

  • Freezing the opening of U.K. stores because the company believes it has enough British sites -- 239 -- in its current format. New approaches are being contemplated.

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