Body Shop in bid talks

October 2, 2001 Posted: 0929 GMT

LONDON (CNN) -- Body Shop International said on Tuesday it is in talks with a number of possible buyers, as it announced a drop in first-half profits.

"Preliminary discussions are taking place with a number of interested parties," said Chief Executive Patrick Gournay. "A further announcement will be made as appropriate." The company declined to name names.

Shares in Body Shop (BOS) rose 4.8 percent to 89.5 pence, valuing the company at about £170 million ($252 million), in early trade in London.

In the 1980s Body Shop boomed on demand for its bodycare products based on natural ingredients, such as its Tea Tree Oil Face Mask and Rice Bran Scrub.

The company expanded rapidly across Europe and the U.S. but fell on hard times as competition from rivals began to bite into profits.

In the U.S. it lost market share to Columbus, Ohio-based Intimate Brands (IB: Research, Estimates), a retailer whose products include the Bath & Body Works brand, while back in Britain supermarket chains such as Tesco and Sainsbury and drug retailer Boots ate into Body Shop's market.

The UK natural beauty products retailer broke off talks with Mexico's Grrupo Omnilife, a fast-growing seller of direct-to-consumer nutritional supplements, which had offered $500 million for Body Shop in June.

Net income in the six months to September 1 fell to £1.9 million ($2.8 million), or 1 pence a share, from £4.7 million, or 2.5p, in the year earlier period. Sales rose 1 percent to £302.6 million, while sales at stores open for more than one year slipped 2 percent.

Body Shop was founded by entrepreneur Anita Roddick, a prominent environmental activist, and her husband Gordon in 1976. The family owns about 25 percent of the company. The firm grew from one store in Brighton, England, to its current 1,900 outlets in 50 countries.

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