Advertisement

Body Shop Canada is in talks to sell its franchise network as the high-profile pioneer of socially conscious retailing fights off bad publicity tied to its British parent and tries to freshen its domestic stores.

A spokesman for Body Shop Canada confirmed last week that the company "has been approached by a third party" about divesting the operation.

"It's very preliminary," spokesman Barry Waite said. "This is not the first time it's been approached by a third party."

The owners of the privately held franchise system, including Margot Franssen, have been trying to unload the Canadian division "for years," and the British parent has been interested in scooping it up, an industry source said.

"She would love to get out," the source said.

Ms. Franssen and other company executives could not be reached for comment.

Peter Saunders, the recently appointed chief executive officer of parent Body Shop International PLC -- and a former Canadian retailing executive -- "would love to have it back," the source added. "Her price is too high."

Industry sources were unaware of who has approached Body Shop Canada. The interest in the company comes as the Canadian operation tries to polish its image in the face of deteriorating financial results at its parent and contradictory accounts about founder Anita Roddick, who has promoted herself as a trailblazing feminist and activist for social and environmental responsibility.

Despite the turmoil, the Canadian stores, which ring up sales of an estimated $140-million, have fared relatively well and continue to generate a profit, industry observers say.

"They've held up pretty steady," says retail consultant Ed Strapagiel at Kubas Consultants in Toronto. "They're doing not bad, though it hasn't grown a lot in the last few years . . . it's still highly regarded by consumers."

Nevertheless, others say that many of the 122 stores appear to be tired and old.

"It needs new energy," said one industry consultant, who asked not to be named. "The Body Shop is stuck in the eighties. It's a dated brand."

Mr. Waite said the company has updated all its stores over the past two years, moving away from the signature dark greens to brighter colours. As well, the company has said it is replenishing inventory faster to woo customers back.

In October, it launched a flagship on the posh strip of Bloor Street in downtown Toronto with an even more updated look featuring recycled timber columns, natural hemp curtains and pale green walls.

Consultant Maureen Atkinson at J.C. Williams Group Ltd. said the store is "lighter and brighter," but ultimately "not much different from their other stores."

She said it's hard to make a splash in the Bloor Street shopping district now that Williams Sonoma and Pottery Barn have set up striking and "really exciting" stores next door.

She added that Ms. Franssen has been "anxious to retire" from Body Shop and would like to unload it.

Observers also said that Body Shop Canada franchisees run well-stocked, tidy stores generally, and deserve high marks for that.

Mr. Waite, speaking for Body Shop, said it has renovated 12 stores this year in the Bloor Street style, and plans seven more for the first half of 2003.

And while the company said almost two years ago it was making a strategic move into big-box stores in power centres, only one such store operates outside of Toronto, he confirmed.

As well, Body Shop has opened two discount depots in Ontario, he said.

Body Shop Canada has battled a growing number of rivals such as Shoppers Drug Mart Corp., Wal-Mart Canada Corp., Costco Wholesale Canada Ltd. and Loblaw Cos. Ltd. that have dipped into beauty products made from natural ingredients.

But the domestic operation hasn't had to contend with strong specialty rivals that are squeezing the U.S. and British business.

Body Shop International continues to struggle after Ms. Roddick and her husband stepped down as co-chairpersons earlier this year after the company spurned several takeover bids.