The Body Shop goes bust, but is there a scent of recovery in the air? A look at the economic landscape.


More and more UK companies are facing financial distress, in particular within the construction and property sectors. This has been largely attributed to macro-economic factors resulting in high interest rates, inflation and weak consumer confidence. Consumers and businesses alike have held back on spending except for essentials, as the costs of food, fuel, housing, office space and energy all remain high. The government blamed interest rates for sending the UK into recession at the end of last year, which did further damage to market confidence.

Recently bank and mortgage lenders are also increasing rates on 2-year and 5-year fixed rate mortgages. This is thought to be mainly due to swap rates increasing, as market expectations that the BOE base rate would fall from 5.25% have not come to fruition and now may take longer to fall than expected.

The statistics

The number of registered company insolvencies in January 2024 was 1,769[1]. This is:

  • An increase of 12.9% compared to January 2022 (1,547);
  • An increase of 5% compared to January 2023 (1,685); but
  • A decrease of 11.8% compared to December 2023 (2,005).

*Figures taken from the Insolvency Service official statistics.

The number of personal insolvencies in January 2024 was 8,089. This is:

  • A decrease of 4.7% from January 2022 (8,485); but
  • An increase of 4.3% compared to January 2023 (7,756); and
  • An increase of 22.8% compared to December 2023 (6,585).

Therefore, as Nicky Fisher (president of R3) has commented, “January 2024 saw the highest corporate insolvency figures for the month of January in four years"[2]. A rise in both compulsory liquidation and Creditors' Voluntary Liquidations (CVLs) since 2019 suggests that creditors are now being increasingly proactive in pursuing their debts, undoubtedly seeking to alleviate their own financial pressures. 

The Body Shop enters administration 

Such economic factors mentioned above have contributed to another well-known high-street name entering administration. The Body Shop, founded by the late Dame Anita Roddick in 1976, is said to be closing almost half of its UK 198 shops and cutting hundreds of jobs, with 7 branches closed immediately. This comes after the business had been purchased by private equity group, Aurelius, in a deal worth £207m in only November 2023. 

The Body Shop International Ltd entered administration on 13 February 2024, giving the company a moratorium from creditor action. The business will undergo a wide restructuring plan which is reported to include a pre-pack administration sale, potentially allowing it to trim off certain liabilities. For example, it has been reported that Aurelius will seek to use its position as a secured creditor to recover its debts from the company[3], but at the expense of other less-preferential creditors, which could include suppliers, partners, landlords and employees. 

This has confused and frustrated creditors such as Land Securities (one of the company's biggest landlords), as in November 2023 Aurelius had promised to "re-energise the business". Placing the company into administration so soon has therefore attracted scepticism from such creditors, and even from MPs[4].

Conclusion/Key Takeaways

  • Recent changes in the numbers of corporate and personal insolvencies appear to be caused in part by a more proactive approach taken by creditors to recover their money than has been seen previously.
  • Macro- and micro-economic factors continue to create financial pressure for businesses and consumers.
  • The Body Shop entering administration is another indicator of the tough retail conditions. Its owner, Aurelius, may seek to use the administration process to effect a pre-pack sale of the business, whilst leaving certain liabilities behind as part of a broader restructuring to allow the business to streamline and continue to trade into the future.
  • Recent reports suggest that we may now be seeing signs of recovery, and Bank of England governor Andrew Bailey has pointed to an expected boost when interest rates start to fall later this year [5]. Such messaging will bolster market confident, but inflationary pressures remain. 

In our recent Navigating Risk Horizons report, we identify key risks threatening business resilience in 2024 as well as practical steps that leaders can take to manage those risks and maximise opportunities to strengthen their business. In particular, we consider how businesses can maintain financial health in the face of global and domestic pressures. 


[1] Figures taken from R3, Insolvency and Restructuring





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