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The Body Shop International PLC 2001: An Introduction to Financial Modeling

Written Case Analysis

Mitchell Bredberg-(12205176)
Mitchell Sovis-(12156556)
Jake Rux-(12159615)
Zach Dorer-(12171436)

Finance 465-001 11/10/15

I. Executive Summary
Anita Roddick was the founder of The Body Shop International PLC. Despite growing a successful business, the company recently ran downhill after losing revenue growth starting in the late 1990s. One of the major problems was intense competition. This unexpected phenomenon caused The Body Shop to lose its image of being the “go to” place in Great Britain’s many shopping venues. Later on, a new CEO, Patrick Gournay, took charge and was faced with a declining pretax profit of twenty-one percent.
Facing a dilemma, Gournay’s recommended plan of action included a focused product strategy of increased investment. He was confident this strategy would produce improved results. To be effective, this strategy incorporated a reduction in product and inventory costs as well as a reinforced stakeholder culture. To justify the course of action with this strategy, we will prepare a three-year financial forecast to help predict The Body Shop’s future earnings and financial needs. This forecast will be based on The Body Shop’s historical financial statements to create the best possible financial model going forward. II. Statement of the Problem When Anita Roddick was still CEO, the main problem affecting The Body Shop was not being able to find a strategy strong enough to overcome competition. Because of a weak strategy or none at all, low sales and reduced profits happened as a result. Unfortunately, this led into further questioning of how the business should operate so that it could grow once more. It also led into a failed restructuring effort as the company continued to report losses. With a brand new CEO,

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