Green is not so rosy at Body Shop

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THE CITY is braced for poor results from Anita and Gordon Roddick's Body Shop when the green cosmetics retailer reports interim figures on Wednesday

Analysts expect pre-tax profits to fall by around a quarter to pounds 9m, but nerves are jangled by Body Shop's transition to a more orthodox operation and a tense retail climate overall.

"You've got to be apprehensive," said Ian Macdougall, stores analyst at broker Williams de Broe. "Body Shop will not be the first retailer to report disappointing figures."

Profits have been under pressure from some pounds 15m of extra spending as Body Shop beefs up its global infrastructure and marketing. The majority of that will fall in the first half.

Most uncertainty centres on the US, now home to more Body Shop stores than any other country. Like-for-like sales there fell 8 per cent in the first three months as Body Shop met stiff competition from the larger Bath & Body Works and other lookalikes.

Main board director Terry Hartin has been appointed to reverse the decline.

Because of growth pains there, and with its core UK market saturated, Body Shop has identified Asia, and especially Japan, as a key growth area. What is unclear is how quickly the additional spending will feed through to the bottom line.

Investors have been understandably wary in recent months. From a high of 231p last year, the stock hit a low of 109p in May when Body Shop warned of little or no overall profits growth this year. The shares closed up 3p at 142p on Friday.