The brand’s owner in the UK, Europe and Latin America Avon Products Inc (API), a subsidiary of Brazilian beauty conglomerate Natura, explained it had filed for Chapter 11 bankruptcy protection to ward off the impact of upcoming lawsuits and debt pressures.

API said the process would enable it to deal with its debt obligations in an “orderly manner”.

The news comes amid a host of legal action against cosmetics brands, including Avon which has faced over 100 claims.

Lawyers have alleged there is a link between cancer and talc, which Avon uses in its eye shadows and face powders.

However, the beauty retailer has repeatedly denied the allegations, insisting it “only uses cosmetic grade talc which has been tested to confirm that it does not contain asbestos”.

Avon bosses said its international sites would remain open despite litigation in the US, noting API was only the business’s holding company and that its operating businesses were not part of the Chapter 11 proceedings.

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After opening its first store outside London in Manchester’s Trafford Centre in May, the make-up titan is now set to open two stores in the North East at Newcastle’s Metrocentre and Eldon Square, as well as one in Birmingham’s Bullring.

Sephora relaunched in the UK in 2022 and re entered the world of physical retail in Westfield Stratford a year later, having previously exited the market in 2005 after opening six UK stores in five years.

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Sephora UK managing director Sarah Boyd said: “We are thrilled to continue this momentum of our rapid growth by opening Sephora stores in key shopping destinations such as the iconic Bluewater shopping centre.

“We have loved seeing the enthusiasm and appetite from our customers around the UK of where they would like us to show up, inspiring us to roll out more of our ‘beauty playgrounds’ and unparalleled shopping experiences to some of the nation’s most beloved retail destinations such as Bluewater.”

Bluewater director James Waugh added: “Sephora is one of the most regularly requested brands by our guests, so we’re really excited to be welcoming it to our retail line-up later this year.

“The brand’s only Kent-based store will be worth the wait for our guests, as it will bring multiple of the world’s most viral beauty brands to Bluewater that our customers wouldn’t have been able to shop for before Sephora’s arrival.”

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The health and wellness retailer ramped up investment amid the current surge in retail crime, including bringing in 80 body cameras and new CCTV monitoring and security for 200 stores.

It also rolled out retail crime reporting platform Auror across all 780 UK and Ireland stores earlier this year.

Holland & Barrett said that since the platform’s launch over 7,000 incidents of theft, acts of aggression or violence against staff have been reported.

It has also been able to identify over 630 repeat offenders through the platform, which the retailer said allows it to “better support positive prosecutions from the police and keep communities safer”.

Holland & Barrett head of loss prevention Mark Williams said: “This investment in loss prevention reflects our steadfast commitment to making our stores safer for our customers and colleagues.

“We recognise that retail crime is a community problem and working collaboratively to adopt the latest new technology can help us to create a better impact faster.”

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The makeup brand is not alone in turning to the social network to sell products.

Retailers including Asos, Zara, THG’s LookFantastic and even WHSmith have signed up to TikTok Shop – a shopping function that allows users to purchase directly through the popular app.

Asos launched on TikTok Shop in March as part of its efforts to reconnect with its twentysomething shoppers and boost sales.

The etailer’s head of sportswear Tim Williams says the platform is “where most of our customers are and [being on TikTok Shop] allows us to access them in a way which is really exciting”.

Asos initially launched 85 products from its Asos Design collection on the platform and had selected influencers to promote the products through shoppable short videos. The move not only boosted sales, but 57% of transactions came from new customers.

Williams explains the retailer has a “burgeoning relationship [with TikTok] so we’re doing some key drops”.

He concludes that Asos wants to be where its customer is and “clearly the customer is there for an increasing amount of time and I see that time is set to continue”.

Rival Zara is also taking note of its customers spending time on TikTok as it prepares to launch live shopping on the platform over the coming months. 

Owner Inditex revealed was investing in new ways to engage shoppers and was bringing the initiative to the UK, rest of Europe and the US following a successful trial in China, which had a positive impact on sales in the region.

The retailer softly launched its store on TikTok Shop back in November and is currently ranked as a top brand on the platform with more than 7.3k items sold.

It is a big expansion priority for retailers of all sizes, with almost one third (29%) of small retailers saying they would like to launch their presence on TikTok this year, closing the gap with large retailers who are 3 times more likely to already be on the platform, according to research from American Express.

From book bundles to £5,000 handbags

It’s no surprise that TikTok Shop is filled with an equally eclectic mix of products as it has users and content. 

“It goes without saying that, if you are a brand in the Gen Z space, being on TikTok Shop is a must,” says TikTok Shop UK marketing director Nora Zukauskaite.

“However, we have also launched several campaigns to help diversify our audience even further and, currently, the fastest-growing age demographics on the platform are the older segments,” she notes.

But what are they buying?

The platform’s largest community – BookTok – has “upended a lot of how books are published and sold”, WHSmith buyer John Webb previously told Retail Gazette, commenting on the retailer’s decision to start a selling a small collection of books on the platform.

Beauty is also one of the most successful categories, with a beauty product sold every two seconds on TikTok. The platform ranks behind just Amazon, Boots and LookFantastic as the UK’s fourth biggest beauty retailer, according to data by Nielsen IQ.

The firm’s vice-president of global beauty Claire Marty notes that TikTok shoppers also tend to spend more money at the end of the year on the platform than the average online shopper, and “a lot of the money is actually coming from older generation”.

While some retailers have been quick to meet their customers on the app – some are a bit more cautious about what it entails.

Superdrug ecommerce, customer, and marketing director Matt Walburn says the retailer has played around with selling on TikTok.

“We’ve had some really good results on it, particularly in terms of TikTok Live,” he says, referring to the app’s live streaming feature. 

He adds that the products it has showcased have generated “a lot of orders”.

“Now we’re at the stage where we think we’ve learned what we need to know,” says Walburn.

“We know [social commerce] is something that will take hold eventually in the UK and in Europe. We know Superdrug will be well placed to play in social commerce. We just want to get the timing right and make sure we do it in the right way.”

However, it’s not just major retailers jumping on TikTok Shop. Smaller brands have also been able to bolster their sales on the platform.

Made By Mitchell, which launched in Boots last month, became the first retailer to surpass $1m (£842,307) in sales in one day.

Founder Mitchell Halliday says: “TikTok Shop has significantly expanded our reach, allowing us to connect with a much wider audience compared to other platforms.

“The seamless transition between content viewing and purchasing has helped boost our sales considerably.”

Similarly, luxury reseller Luxe Collective is also reaping the benefits after it launched on the platform’s shop in April.

Founder and CEO Ben Gallagher says the company is on target to hit £11m in sales this year and estimates that around 20% to 30% would have come through TikTok.

Gallagher admits that he was sceptical of listing Chanel, Hermes and Louis Vuitton bags on an app that also sold dresses for 99p.

“I thought it would be more like a discount and an outlet type of thing that people wouldn’t be buying full price stuff on there,” he says.

“Don’t get me wrong, we have to discount it a little bit,” Gallagher notes, estimating the company is reducing its prices on the platform by an average of 5% compared to those on its ecommerce.

“We have to gamify it a little bit to get people watching and get views, but people are buying full price items on there. We’re selling stuff for thousands and thousands of pounds every single night, which is wild,” he adds.

The TikTok effect

TikTok Shop is certainly turning out to be a lucrative business and Luxe Collective’s Gallagher admits the business has had to “pivot massively due to the opportunity”.

In fact, its plan to open more physical retail spaces has dropped down its priority list as a result of its TikTok success.

NIQ’s Marty explains the app’s “strong algorithms” and shopping feature, which can be seamlessly integrated into video content, can drive people’s impulse purchases.

“My colleague didn’t really want to purchase on TikTok Shop – she just didn’t care, and one day she was like ‘the shop found me’. She was just scrolling and looking at stuff and ended up purchasing and spending way more than she would have usually,” Marty says.

Gallagher believes the platform’s shopping feature is much easier to navigate for both seller and customer than that of Instagram, which launched in 2020 but was removed from user’s homepages a year later.

“To be blunt, it’s just a joke compared to TikTok. What TikTok has created is just unbelievable and Instagram isn’t anything on it,” says Gallagher.

“We probably get zero sales from Instagram Shop, maybe one a month, and we get hundreds a month from TikTok,” he shares.

Even with social commerce becoming an increasingly important avenue for the business, it still only represents a fraction of total sales. However, that could soon change.

“We see social commerce as the future of fashion ecommerce,” says Boohoo senior influencer and PR manager Stephanie Riddell.

“It allows us to connect more deeply with our audience and leverage the authenticity and reach of our influencers to drive sales. This personalised approach is already showing significant promise in terms of increasing the value of social traffic to our site and creating more engaging customer journeys.

Riddell explains that social commerce is a “crucial element” of the retailer’s growth strategy and that “it will continue to have a substantial impact on our future sales by blending social engagement with seamless shopping experiences”.

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It is understood that the make-up business, which was once the must-have viral brand, shuttered all seven of its shops on Wednesday (31 July), with 73 employees made redundant effective immediately.

Morphe, which opened its first UK store in Westfield Stratford in 2018, has removed the standalone branches from its online store locator and now only shows its make-up counters in Boots and Superdrug, as well as selected Selfridges, H Beauty and Flannels stores.

A spokesperson from Forma Brands, Morphe’s parent company, told Retail Gazette: “Forma Brands has made significant progress over the last year positioning our business for growth by focusing on our flagship Morphe brand largely through our wholesale and ecommerce operations.

“During that time, our owned Morphe stores in Europe, which have consistently provided an extraordinary experience for our customers, faced disproportionately high store rent obligations.

“We have therefore made the difficult decision to close our seven UK and one Amsterdam retail locations. This move aligns with our strategy to prioritize and expand our successful wholesale and e-commerce operations, similar to our model in the U.S.”

The continued: “We also facilitated an ownership transition of our UK wholesale and e-commerce businesses, which will operate as FORMA BRANDS UK LTD., effective immediately.

“We are immensely grateful to our incredible store teams for their dedication and passion over the years and are working to support them through this transition. Due to store closures, impacted store team members were made redundant immediately.

“In recognition of their dedication, the parent company Forma Brands LLC has provided goodwill payments to all affected employees, equivalent to an enhanced redundancy package.”

Former employees took to social media platforms TikTok and X – formerly Twitter – to criticise the brand about its lack of communication over the closures.

My friend who works at morphe has just let me know she’s been made redundant because they’re closing all UK stores with no notice. What’s happened to that store man

— . (@tbankss_x) July 31, 2024

Getting wind from fellow employees that Morphe is making its UK staff redundant with zero warning, or pay.

Morphe used to be a huge giant of the makeup world, now it seems to have just whittled away.

— ★ gods favourite emo ★ (@yasminesummanx) July 31, 2024

The closures follow the brand’s decision to shutter all its stores in the US in Janaury 2023 as it shifted its focus to its wholesale and ecommerce operations.

However, the announcement was shortly followed by Morphe’s parent company Forma Brands filing for chapter 11 bankruptcy.

In March 2023, it was revealed that the company had reached an agreement with its lenders Jefferies Finance and Cerberus Capital Management to acquired it in exchange for $690m in debt relief.

Morphe, which was once valued at $2bn, has had a tumultuous few years due to reduced demand for colour cosmetics.

It grew rapidly thanks to its partnerships with make-up influencers Jeffree Star and James Charles, but parted ways with the Star over allegations of racist and offensive language, and Charles over sexual misconduct allegations.

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Former Molton Brown CEO Charles Denton’s optimistic post on LinkedIn came days after the chain’s administrators at FRP confirmed it had entered an exclusivity agreement with investment group Auréa.

While Auréa has kept a low profile, the team behind the consortium have an extensive history in the beauty and investment sector.

That said, The Body Shop will be the firm’s first retail acquisition. Retail Gazette takes a look at the team behind Auréa to see whether Britain’s once beloved vegan beauty chain is in safe hands.

Who is Auréa?

Auréa describes itself an investment platform “focused on beauty, wellness and longevity”, led by British tycoon Mike Jatania alongside founding partners Paul Raphael and Andrew Vagenas.

It claims the group is “building a beauty and personal care portfolio by investing in brands that have embraced new consumer trends”. It is also focused on “digitally native, founder-led disruptive brands”.

The company boasts on its website that it has “over 40 years of operational sector experience and a track record of acquisitions in the industry”.

The Body Shop’s former chief executive David Boynton said on LinkedIn that “it can only be good news for the brand”.

“If the deal is completed as planned, the new owners will bring a history of sensitivity to great British beauty brands and a track record of successful turnarounds. For the millions of loyal customers around the world, the fabulous people that remain in the company and the amazing franchisees and community trade partners, this should all be positive news.”

Similarly, Fiona Glen, director of projects at beauty consultancy The Red Tree, notes that unlike The Body Shop’s previous owners – Aurelius, Natura and L’Oréal – where the brand was”a small fish in a big pond”, it will get “a lot more share of voice and focus with this ownership”.

However, retail search specialist Clarity’s managing partner Fran Minogue explains the biggest challenge for the team will be about finding The Body Shop’s relevancy in the market.

“The Body Shop has to figure out whether it wants to be Lush – fun products, bright colours, appealing to a much younger audience – or positioned to a more sophisticated consumer alongside Ren and Neal’s Yard,” she says.

Meet the team

Charles Denton

Auréa appointed ex-Molton Brown chief executive Charles Denton to lead the turnaround of The Body Shop.

It won’t be Denton’s first rodeo as he is credited with leading the turnaround of Molton Brown from the brink of collapse to a £170m business.

Posting on LinkedIn, he said last week: “Over the next few weeks, we’ll work together to develop a strategic plan that sets up the business for long-term growth.

“If everything plays out as intended, we should emerge from administration in August.”

He added: “It’s time to change the narrative around this powerful brand which is loved all over the world. I am optimistic about the future and look forward to what we can achieve together. Will it be tough, absolutely, but we have all the right ingredients to succeed.”

Denton’s appointment has been welcomed by the sector. Minogue says: “Charles is hugely experienced. He built the Molton Brown business, both wholesale and retail and internationally.”

“I’m sure [he] can bring the necessary strategic vision and he will need support from strong creative and marketing teams who can bring a fresh vision to the brand and make it relevant.”

Mike Jatania

Backing Denton is beauty tycoon Mike Jatania, one part of Auréa’s founding board.

Jatania started his career in his family business Lornamead group in 1984, climbing the ranks through the company before becoming chief executive in 1990.

The group has a history of acquiring and investing in heritage beauty and personal care brands from companies such as Unilever, Sara Lee, Proctor & Gamble, Wella AG and Henkel.

During his tenure, Lornamead built a portfolio of personal care brands such as Harmony hairspray, Lipsyl lip salve and Yardley perfume. He sold Lypsyl to rival Li & Fung back in 2013 for nearly £156m ($200m).

Minogue explains that Jatania is “a very canny investor and knows the sector well”.

“He set up Auréa specifically to look for skincare, beauty, wellness assets. He’ll bring a huge amount of experience – the ability to not only invest but to attract additional investment.”

Paul Raphael

Joining Jatania is veteran investment banker Paul Raphael, who has worked for some of the world’s top banks, including Merrill Lynch, Credit Suisse, Salomon Brothers, as well as most recently at UBS.

He spent 11 years at UBS, joining in 2010 and working across several divisions including as head of wealth management before later being promoted to executive vice chair from 2018 to 2021.

Raphael’s finance expertise will certainly come in handy as it was The Body Shop’s messy balance sheet and lack of funding that pushed it into administration.

Fiona Glen, director of projects at beauty consultancy The Red Tree, notes that The Body Shop is probably “the most store reliant” of Auréa’s investments.

“There are a lot of costs involved with managing individual stores, stock management and all of that. It’s relevant for any investment, but because of the weight of the store distribution at the moment, it means that the finances really need to be managed carefully, both,” she says.

Minogue also warns the new owners will need to keep a tight leash on finances: “In terms of skills, Body Shop needs restructuring and transformation if it is to grow; someone who can take a hard look at cost and not be afraid to cut headcount.”

Andrew Vagenas

Andrew Vagenas is the final member of Auréa’s founding trio and has spent more than a decade leading Amazon’s top reseller, Pharmapacks.

Vagenas co-founded the company, which resold health, personal care, and beauty products, in 2010 and the business quickly reached $500m in sales through selling on Amazon, Walmart and other US marketplaces.

While the company eventually filed for bankruptcy in 2022 citing a lack of funding, Pharmapacks was known for its smart go-to-market strategies and competitive pricing.

Glen explains Vagenas brings the obvious expertise to scale and sell, as well as suggesting his experience with the American market “can come in handy”.

She adds: “He knows Amazon, and that’s usually a key part of [Auréa] looking at an investment. Is there an opportunity to grow it on Amazon? I would suggest there probably is for The Body Shop.”

Karim Abbas

Also sitting on the team is Karim Abbas, who has spent the last 12 years at L’Oreal.

Glen notes Abbas is “very involved” with the business and “plugs the beauty gap” after spending time at one of the world’s biggest cosmetic companies.

He joined L’Oréal in 2010, holding several positions including zone general manager for Europe, Middle East, Africa and India and looking after brands such as Garnier, Maybelline NY, IT Cosmetics, CeraVe, Skinceuticals, Vichy and La Roche Posay.

According to Abbas’s LinkedIn, his time at the conglomerate – which owned The Body Shop from 2006 and 2017 – included taking the business “from double digit decline to double digit growth, while growing sustainably at 3X faster than the market and enhancing profitability”.

He was also responsible for redeveloping the company’s marketing strategy focused on Chinese and European consumers while upgrading retail design and education.

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The US giant opted to keep Boots last month, abandoning its plans to sell the chain, which has become a standout performer across the group. It comes as Walgreens has struggled in its main US market, slashing its profit outlook and unveiling store closure plans.

Ornella Barra, the head of Walgreens’ international and wife of executive chairman Stefano Pessina, told The Sunday Times: “Boots is very important for Walgreens. It’s in a very good position in the market, so at the moment, the best solution is for Boots to remain part of the group.”

“Walgreens will continue to support Boots to remain number one in the UK market. At the right time, who knows… it’s important to be open to everything.”

Ornella insisted that Walgreens would continue to invest in Boots and has recently signed off a three-year investment plan that will total hundreds of millions of pounds.

This is on top of the £527m it has invested in Boots over the past three years, she said.

Revamping stores is a key focus for the retailer. It has already introduced new beauty halls or healthcare departments in 450 of its larger stores and will upgrade a further 70 stores this year, followed by 100 more next year.

Boots UK retail director Anthony Hemmerdinger said: “We would accept that not all our stores are at the standard we want them to be, but we have an aspiration to have a great Boots store in every town and no stores that we are ashamed of.”

Boots has also grown its beauty range to include more than 500 brands and now responds faster to beauty trends, such as the current demand for South Korean skincare products.

It has also opened a beauty-only store in Battersea power station late last year, with more likely coming in other major cities.

The retailer has also ramped up its digital business since the pandemic, with app users soaring from one million pre-Covid to more than seven million today..

“Five or six years ago, we were among the worst in terms of our digital presence, but now we are in the pack. When the new platform goes live in a year’s time, we will be on the leader board,” said Boots outgoing boss Seb James said.

James, who has helped lead the UK retailer to 13 quarters of consecutive growth, revealed he was leaving the business last month as he looks to take the helm of Veonet, one of Europe’s largest ophthalmology chains.

Barra said there had been “plenty of interest” in James’ role from external and internal candidates and that she hopes to conclude the search in the near term.

In healthcare, Boots is hopeful that the new Pharmacy First scheme, which aims to relieve pressure on GP surgeries by allowing pharmacies to diagnose and prescribe medication, will provide a boost.

Since the scheme launched in January, Boots has carried out more than 20,000 consultations a month for which it is paid £15 per consultation.

Boots is also planning to use its data to help identify and recruit participants for clinical trials.

It is close to forming partnerships with research institutes and healthcare companies, with the first tie-up due to be announced in the coming weeks, The Sunday Times revealed.

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The initiative has been introduced to 21 of the retailer’s stores covering London, Manchester, Bristol, Birmingham, Leeds, Glasgow and Edinburgh.

Customers will be able to shop from over 1,000 of The Perfume Shop’s most popular products and have them delivered in as little as 25 minutes.

The tie-up with the fragrance retailer forms part of the rapid-delivery app’s ‘Deliveroo Shopping’ expansion to add more non-grocery and food brands to its platform. The delivery specialist has inked partnerships with retailers including Screwfix, Ann Summers and Boots over the past year.

The Perfume Shop managing director Gill Smith said: “This exciting collaboration is all about opening new avenues and making things more convenient and accessible to our customers and being able to enjoy their favourite fragrances with the same ease and speed they’ve come to expect with Deliveroo. We’re delighted to see where this partnership will take us in the future.”

Deliveroo chief operating officer Eric French added: “We know people are using Deliveroo to send gifts to friends and loved ones as well as purchase fragrances for themselves so this will be an ideal partnership for our customers.

“We look forward to welcoming more partners to Deliveroo Shopping as we continue to expand and enhance the convenience and variety we know our consumers love.”

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Speaking to This is Money, the retail boss said the change was essential for the creation of “vibrant” shopping hubs throughout the country.

Commenting on physical stores, Macnab said: “Please. Sort out the rates. It is such an unfair burden on retail.”

He also urged the government to ditch the tax charged on essential products such as toothpaste and sunscreen, which the health and beauty specialist has been campaigning for since the tampon tax was scrapped.

On a local level, he wants councils to address expensive and punitive car parking fees deterring customers from the high street.

Additionally, he described strict restrictions around hiring and funding apprenticeships as “extremely difficult,” adding that the business was “opening stores and want to be able to hire people for them”.

Moreover, Macnab said Superdrug was prepared to plug the gap left from high numbers of high street pharmacies shutting, with 432 closing last year.

The retailer, which saw profit skyrocket in its latest results, opened 14 new stores last year, including in Manchester’s Trafford Centre and London’s Brent Cross Shopping Centre.

The CEO, who is keen to speak to ministers on ways to expand pharmacists’ roles, said: “Pharmacists are experts at what they do and we want to make better use of them.”

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Former Molton Brown CEO Charles Denton, who leads beauty industry tycoon Mike Jatania’s Auréa consortium, which entered an exclusivity agreement with the chain’s administrators FRP earlier this week, is understood to be planning to retain all of its existing UK stores.

Posting on LinkedIn, Denton said: “Over the next few weeks, we’ll work together to develop a strategic plan that sets up the business for long-term growth.

“If everything plays out as intended, we should emerge from administration in August.”

He added: “It’s time to change the narrative around this powerful brand which is loved all over the world. I am optimistic about the future and look forward to what we can achieve together.”

A joint statement from the administrators of The Body Shop International, FRP, and Auréa group earlier this week said: “Following a competitive bidding process, the joint administrators of The Body Shop International have now entered into an exclusivity agreement with a consortium led by Auréa group.

“While the deal is not yet complete, we believe the combined experience of the consortium, together with the existing management team, represents the best outcome for creditors and will ultimately ensure the long-term success of The Body Shop.”

It added: “A period of due diligence will now take place, with the intention to complete the transaction in the coming weeks.”

The move comes after The Body Shop fell into administration in February, just months after being acquired by private equity firm Aurelius.

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