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Goldman Sachs linked to The Body Shop bid

Investment bank Goldman Sachs is reportedly preparing a £600 million bid for The Body Shop.

Owner L’Oreal decided to put the ethical cosmetics brand on the market last month, apparently unwilling to invest in arresting falling sales and market share.

The Body Shop bid price would fall considerably short of the £850 million L’Oreal is said to be seeking – a figure roundly considered as highly optimistic in the investment community.

Private equity companies Carlyle, CVC Capital Partners, Advent International and Apax Partners have all been reported to have shown an interest in the business. L’Oreal paid £650 million for the business in 2006.

Founded by Dame Anita Roddick and her husband Gordon in 1976, The Body Shop has grown to more than 3000 stores in 66 countries. The original concept was to create an ethical approach to cosmetics with fewer chemicals and no animal testing.

Sales fell 3.2 per cent in the first half of 2016 and by 2.8 per cent in the third quarter. Another decline is expected to be reported when L’Oreal releases its results this month.

Charlotte Pearce, an analyst with GlobalData, warns The Body Shop needs to freshen its offer or face its eventual demise.

“The brand has become outdated and has failed to provide an innovative offer with exciting new products to entice customers into stores, causing the retailer to lose out to brands with more relevant beauty and skincare ranges,” Pearce wrote in a column published by Inside Retail Asia in February.

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