OPERATIONAL REVIEW

 

Sean Kristafor
General Maager

The Body Shop is a global brand marketing naturally-inspired toiletries, cosmetics and gifting. The Body Shop serves mainly female customers in the middle and upper income markets.

Review of the year

The Body Shop produced another competitive performance as discretionary spending in the luxury beauty and gifting market remained under pressure. Sales growth of 5% was driven by new store openings, with unit sales increasing by 5.4% as the brand experienced negligible price inflation.

Expenses in the brand were well controlled, shrinkage and waste were tightly managed and stock availability levels were consistently above 95%.

Womenís fragrances performed strongly as three new ranges were launched during the year, while the bath and body category continued to be the brandís core range. Slower growth was experienced in skincare ranges and in the make-up category.

Three new stores were opened to increase the store base to 40, with the brandís weighted trading area growing by 8%.

Capsule ranges of The Body Shopís best sellers were introduced into 11 Clicks stores to increase distribution and accessibility to the brand. Sales have not been negatively impacted where these Clicks stores trade in the same shopping centres as stand alone stores of The Body Shop.

As part of the global The Body Shop brand, the local franchise is committed to upholding the core values of sustainability, including fair trade, community upliftment and non-exploitation of scarce resources. The brand markets several certified organic products. The Body Shop utilises the supply chain of the Clicks brand to maximise economies of scale at the distribution centres and to minimise the carbon footprint of stock deliveries.

Strategy and focus for 2011

The Body Shop strives to generate continuous excitement through product innovation and value promotions to entrench its position as a gifting destination.

Three new stores are planned for the 2011 financial year in premium locations.

The distribution of The Body Shop products through Clicks stores presents a further growth opportunity. The capsule ranges in Clicks will be extended to more than 25 additional stores in the year ahead, with an improved product range selection and enhanced in-store presentation. Shortly after year-end a new store-within-a-store format of The Body Shop was opened in the new Clicks store in Cavendish Connect in Cape Town.

The ďLove Your BodyĒ loyalty programme was relaunched in September 2010 based on the successful Clicks ClubCard model. The ClubCard technology will enhance The Body Shopís ability to engage with customers to increase participation levels and grow basket value.

The current economic climate continues to influence consumer spending behaviour and the brandís promotional strategy will be core to attracting and retaining customers. Operating margin guidance for the year ahead remains at 14% to 16%.

operational review