Aurelius, the private equity firm that oversaw the demise of the LloydsPharmacy brand, is lining up administrators for the Body Shop just weeks after closing a deal to acquire the business.

Sky News reported on Friday that Aurelius was preparing to bring in FRP Advisory to oversee an insolvency operation for the Body Shop’s 206 UK branches, a move that could lead to significant numbers of branch closures and job losses but is not expected to see the brand disappear from the high street completely.

The beginning of this year saw Aurelius close on its acquisition of the Body Shop for $254m (£207m) – significantly less than the $1.04bn price tag the chain commanded when it was acquired by Brazilian company Natura in 2017.

Founded by Anita Roddick in 2017, the cosmetics chain has struggled to maintain its market position in the face of new rivals emerging in recent decades. The company’s latest accounts show that in the 2022 calendar year it made a pre-tax loss of £71m, compared to a pre-tax profit of £10m the year before.

Sources told Sky News that after the deal closed early this year, Aurelius determined the business had insufficient working capital and was not trading as well as expected, leading to the decision to appoint administrators.

Retail Week reported on Thursday February 8 that Natura had written to Aurelius expressing its concern that around 20 former Body Shop employees had not received bonuses collectively worth £2-£3m at the end of January as expected.

In November 2021, Aurelius paid £477m for McKesson’s UK operations, which included the then 1,000-strong LloydsPharmacy business and wholesaler AAH. 

In November 2023, it was announced that the LloydsPharmacy chain had disappeared from the high street completely following a year of intense branch sale activity.  

Documents published in late January showed that the former multiple, which now trades as Diamond DCO Two Limited, has £8m at its disposal to service debts amounting to almost £300m.