The ethical empire that started with a £7,000 investment

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The Independent Online

Yesterday, amid the opulent surroundings of a City hotel, the woman who made her fortune from cruelty-free banana shampoo and politically correct mango body butter, told the world about a deal to sell the Body Shop to L'Oréal.

Dame Anita - she received her honour from the Queen in 2003 - got her £4,000 from the bank and a further £3,000 from a friend, Ian McGlinn. The first shop was opened in Brighton the same year with what then seemed to shoppers of the 1970s a bewildering array of exotic lotions and unctions. Sourced from producers in the developing world and wrapped in recycled packaging, her toiletries brilliantly anticipated the explosion in the ethical consumer market - a market valued last year at £25.8bn. But while the Body Shop might have preached hippy values, Dame Anita embarked on an aggressive and nearly fatal expansion policy. With an apparently never-ending demand for its products, at one point the company was opening two shops a month.

A ubiquitous feature of the British high street, alongside McDonald's and Dixons, Body Shop spread to 53 countries. Some 77 million customers shopped at its 2,000 stores. As success grew, so the campaigns became more daring. Alongside the fruit body rubs and nut facial scrubs, Dame Anita championed a multitude of causes ranging from human rights to, most famously in 1980, a policy of not testing on animals.

The Body Shop joined the stock market in 1984. But by the end of the 1990s, amid a wealth of imitation "ethically-sound" products, it was starting to look tired and dated.

A more aggressive management team was bought in to spice up the brand and take it up market. The chief executive Peter Saunders replaced Dame Anita in the day-to-day running of the firm. Substantial re-organisation over the past four years has seen profits return to full health and earnings per share soared 22 per cent with sales in 2005 of £708m.

Success made it attractive to potential buyers particularly those looking for an image makeover themselves. The successful suitor, L'Oréal, is a lipstick which that owns brands such as Maybelline and Lancome. And yesterday as the marriage was formally announced, the strange mixture of corporate cultures was evident.

While L'Oréal management discussed expansion plans, Ms Roddick was talking about door-to-door selling of perfumes as a way to address loneliness in society. It could prove an interesting relationship.

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