Tuesday, January 26, 1999 Published at 09:40 GMT
Business: The Company File
Face lift for Body Shop
The company's message on recycling proved a success in the 1980s
Troubled cosmetics chain, Body Shop International, has announced a radical shake-up of its loss-making operations.
The group plans to create a new management structure and outsource its manufacturing activities, which could have an impact on jobs.
Body Shop's manufacturing operations currently employ around 1,000 people.
Ms Roddick said the changes would not undermine the ethos of the Body Shop. "I think it's right to move on," she said.
She denied that the company would lose control of manufacturing by outsourcing, saying manufacturers would have to match Body Shop's standards and submit to independent social and environmental audits.
Mr Gournay said the moves would increase the group's flexibility and the speed at which products reached the market.
The company expects the changes to save around £8m a year after initial savings of around £4m in the group's next fiscal year.
However, the new measures will involve a further £8m in one-off costs, bringing total one-off charges for the year to £23.5m.
"We believe these changes will significantly enhance our capabilities to improve our operating efficiencies and our product innovation, which has been the consistent hallmark of our success," the group said in a statement.
Review of plants
The shake-up may include the sale of two manufacturing plants at Littlehampton, southern England.
The Littlehampton plants employ 550 staff and there are 576 employed at Body Shop's head office, also in Littlehampton. The soap factory in Scotland, which has 150 staff, is not expected to be affected.
The restructuring will see the firm split into four regions - the Americas, the UK, Europe and Asia.
The group's franchising relationships will also come under scrutiny. Body Shop has already taken control of franchises in France and Germany and owns 75% of its US stores.
In Britain, Body Shop owns 75 of the 265 shops, while in Asia, all shops are franchised, except Singapore. The group has around 1,700 shops worldwide.
However, the company appears to have lost its way. Market watchers expect the Body Shop to deliver profits of just about £25m ($41.48m), well below last year's result of £38m. After disappointing sales during Christmas the Body Shop issued a profit warning.
The company is well aware of the need to change. In its last annual report issued one year ago it "highlighted the need for some fundamental changes in order to develop the business going forward".
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