BODY SHOP UNVEILS ITS E-COMMERCE STRATEGY
Byline: James Fallon
LONDON — The Body Shop International PLC is expanding its Web.
The beauty company Wednesday said it has formed a joint venture with Softbank Venture Capital to develop its e-commerce and Internet presence. Under the terms of the deal, Softbank will pay Body Shop an initial $15 million in exchange for a 24 percent stake in Body Shop Digital. The retailer will own 59 percent and the remaining shares will be reserved for employees and franchisees.
The company’s e-commerce site is expected to be launched in the U.S. late this year, and then in the U.K. in the first half of 2001, a Body Shop spokesman here said. It then will roll out to other geographical markets.
The site is expected to sell most of Body Shop’s products, he added.
“Our firm belief is that a multichannel strategy will benefit our retail business as it will develop a more solid relationship with our customers,” Patrick Gournay, Body Shop’s chief executive, said in a statement. “Developing a strong Internet presence is a critical part of this multichannel strategy as it will allow us to increase the loyalty of existing customers while also broadening our customer base.”
Body Shop Digital will be overseen by a completely separate management team headed by Andy Sack, the founder of the Internet expertise network Abuzz and entrepreneur-in-residence at Softbank Venture Capital, which has invested in more than 140 Internet companies. Body Shop Digital will be based in Seattle.
Body Shop officials declined to project sales figures for the new venture, but Gournay said Internet sales were expected to make up a substantial portion of the group’s business in future years.
The U.K. retailer announced the formation of Body Shop Digital in reporting a substantial improvement in its financial performance as a result of strong growth in the U.S. Body Shop reported profits after taxes and exceptional items of $29.1 million on an 8.7 percent increase in sales to $521.5 million for the year ending Feb. 26. This compares with losses after taxes and exceptional items of $7.3 million on sales of $479.8 million the previous year.
Body Shop’s profits and sales improved in all its markets except the Far East. The U.S. — where the company’s operations are overseen by a joint venture with Body Shop director Adrian Bellamy — led the way with a return to profit last year after being hit by exceptional charges in fiscal 1999. Operating profits after exceptional charges in North America totaled $10.3 million compared with losses after exceptional items of $4.1 million the previous year on a 1.1 percent increase in sales to $241.1 million from $238.4 million.
Gournay said in the statement that the company’s American operations would continue to focus on cost control in the current financial year and would only open a few stores in advance of the rollout of a new store design. Body Shop also plans to continue to expand its mail-order operations in the U.S.
In other geographical markets the company is continuing to develop new store formats, roll out mail-order or direct sales and invest in other retailers. In the U.K., Body Shop plans to expand its Body Shop Direct service, which last year reached more than 900,000 customers through home parties. It also is opening factory outlet stores in the U.K., Australia and Japan; stores in rail and subway stations, and kiosks.
Body Shop last year acquired a majority stake in the retail chain Botanicus, which operates 20 stores in the Czech Republic selling herbal products. Gournay said Body Shop believes there is good potential to expand the chain internationally, although he didn’t reveal a time frame.