Body Shop Will Import a New Chief Executive
Anita Roddick, the outspoken chief executive of Body Shop, said Tuesday that she is relinquishing day-to-day control of the financially troubled beauty products company.
Roddick, who founded the firm in 1976 and oversaw its rapid global expansion, will become co-chair along with her husband, Gordon.
Patrick Gournay, executive vice president of North and South American operations at the French food company Groupe Danone, will become the new Body Shop chief executive starting July 14.
Heralded as a pioneer of natural skin and hair products, the London-based Body Shop now plays catch-up to competitors such as Bath & Body Works and Aveda, which are viewed as more dynamic marketers to fickle American consumers.
Roddick has been criticized for devoting herself to environmental and other socially conscious endeavors at the expense of running an up-to-date business.
“The market has been moving much more quickly than she has,” said Allan Mottus, editor of a New York-based beauty newsletter. “She got fixated on a 1970s look, and that retail format is too old for this market.”
Body Shop’s woes can be compared to the financially beleaguered Crown Books, which failed to keep pace with its younger rivals, Barnes & Noble and Borders. While Crown stuck to its niche of selling discounted books in spare settings, its competitors lured consumers by offering elaborate stores, coffee bars, music and sitting areas.
The Body Shop only recently began remodeling its cluttered, dark-green stores and redesigning its packaging; Aveda and Bath & Body Works have continuously modernized their stores, products and packaging.
In a statement, Roddick downplayed suggestions that she is taking a step back. She said she is simply getting a new title and additional help to run the retailing business, which opened its first U.S. store a decade ago.
“I will be as involved in the business as ever,” she said. “The restructure simply frees me up to concentrate on what I love best--giving my ideas, working with the creative teams to come up with great new products, cutting-edge marketing ideas and putting my energy into social campaigns and developing new strategic alliances.”
Roddick’s announcement came the same day the company released its financial results for the fiscal year ended Feb. 28. Although overall retail sales were up 5% to $970 million, comparable store sales were flat.
In the United States, sales at stores open at least a year declined 5%. Revenue at the 290 U.S. outlets accounts for a quarter of Body Shop’s business.
Adding to the company’s ongoing financial struggles, its shares have fallen 35% in the last year, with investors skeptical that the firm could turn itself around without significant structural changes.
“There’s little doubt that the Body Shop required changes at a senior level,” Robert Clark, a London-based consultant, told Bloomberg News. “The problems were in orchestrating all the far-flung parts of the business. They needed an organizer, someone with experience on an international level.”
Gournay, 50, will direct the company’s retail operations at its 1,600 stores in 47 countries. At Danone, Gournay was responsible for eight companies that produce total sales of $1.5 billion in five countries.
“Patrick brings to the Body Shop things we lack,” said company spokeswoman Didier Lagae, adding that the Roddicks have been looking for a new chief executive for more than a year. “What we have plenty of are ideas and creativity. What we’re not good at is translating those ideas to new products and bringing them to market.”
In particular, Body Shop needs to recharge its U.S. business. During the last three years, the U.S. unit has lost $10 million. It also has been jolted by key executive departures, including last January’s resignation of Steen Kanter, chief executive of the U.S. unit.
As part of an effort to revitalize U.S. sales, Body Shop will form a joint venture with Bellamy Retail Group, headed by Adrian Bellamy, former chairman of U.S. duty-free goods retailer DFS Group.
Bellamy, who serves on the board of directors of Body Shop, Gap, Williams-Sonoma and Gucci, is investing $1 million in Body Shop and has an option to buy 49% of the U.S. business until 2000. Between 2000 and 2002, he will be able to buy 2% more, giving him majority interest.
“We feel Adrian is the right person to address the U.S. business, where we’ve been underperforming for the past few years,” said Lagae. “Although we were the first to launch natural beauty products, we might have been just a bit too slow in carrying the business forward. We have to be a lot quicker to get products on the market.”
