KUALA LUMPUR (Feb 15): A day after news broke that the UK arm of The Body Shop has filed for administration, InNature Bhd — the franchisee of the ethical cosmetics retailer in Malaysia, Vietnam and Cambodia — saw its share price on Bursa Malaysia skid to its all-time low of 28.5 sen after dropping 4.5 sen or 13.6%.

The counter saw 6.54 million shares change hands on Wednesday, 10.5 times its 12-month daily average of 624,249 shares.

At 28.5 sen, InNature has a market capitalisation of RM198.22 million, less than half its initial public offering valuation of RM451.76 million in early 2020, based on 64 sen per share. Year to date, the counter has fallen 21.92%.

InNature managing director Datin Mina Cheah-Foong, however, said the company is continuing to operate as usual, as it has been reassured by its franchisor — The Body Shop International (BSI) — that events in the UK has nothing to do with the group's global head franchise partners like InNature.

"So they've spoken to all of us in the head franchise markets to just reassure us. For us, the biggest concern was the supply chain — whether the products are going to come to us and whether there will be any interruptions. But they've assured us that they've actually secured supply chains right up until the contract runs, all the way until past 2025," Cheah-Foong said when contacted by The Edge.

While Cheah-Foong candidly said "we'll wait and see" how this assurance from BSI pans out for those in the franchise markets, she said InNature is in a very good position stock-wise, as it had coincidentally decided to increase its top 200 stock keeping units recently, due to prior shipment delays following the Houthi attacks in the Red Sea. BSI is also the sole supplier of The Body Shop products, according to InNature's prospectus.

“Hence, just in case there is any major hold-up in the shipments, we would still have stock. So, now it looks like this will come in good stead just in case there is any supply disruption. But, of course, BSI has taken pains to assure us that [the UK development] does not affect head franchise markets at all,” she added.

News of the UK arm of The Body Shop falling into administration broke on Tuesday night. Reuters reported that business advisory firm FRP Advisory has been appointed its administrator.

The UK-based retailer has faced an extended period of financial challenges under previous owners, which coincided with a difficult trading environment for the wider retail sector, according to FRP.

InNature, which has a 10-year franchise deal dated June 2019 with BSI, has also been facing a challenging time due to weak consumer sentiment and higher operating expenses.

The retailer’s earnings for its nine months ended Sept 30, 2023 fell 60.02% to RM5.88 million from RM14.71 million in the same period a year ago, as revenue dropped 9.56% to RM98.2 million from RM108.58 million.

Cheah-Foong, together with her husband Datuk Simon Foong and their two sons collectively hold about 70.6% in InNature via four private companies. Foong is also InNature's chairman.

As at end-September 2023, InNature had 122 stores across Malaysia, Vietnam and Cambodia.