Apothecary Neal’s Yard feels the stress of inflation

Apothecary warns against “material uncertainty” on finances: Quick, pass the essential oil! Now Neal’s Yard is feeling the stress of inflation

Walk down an ordinary street in London’s Covent Garden and you’ll be greeted with an explosion of color. Neal’s Yard is an alley full of rainbow-colored shops and cafes that has been a hotspot for health-conscious shoppers for decades.

Chief among them is Neal’s Yard Remedies – a classy cosmetics group that was created long before the concept of organic skin care was popular.

But its future has been thrown into doubt due to rising raw material costs, rampant inflation and customers cutting back on luxury spending.

In the red: Neal’s Yard Remedies, whose flagship store is in London’s trendy Neal’s Yard

Founded by entrepreneur-turned-farmer Romy Fraser in 1981, Neal’s Yard Remedies has become a cult brand.

Its distinctive dark blue tubs and small aromatherapy bottles are found in the bathroom cabinets of many celebrities, including Jennifer Aniston, Thandiwe Newton and Jade Jagger.

But the group says it is affected by fallout from the war in Ukraine, which could make it harder to source high-quality organic ingredients from around the world.

In its latest accounts, the directors say there is “material uncertainty” about whether the company can continue operations.

The group warns that there is a “plausible” scenario in which the plethora of cost increases will hit turnover by 8%.

This, he says, could make it harder to keep track of his debts.

Sales fell more than 30% to £45million in the year to September 2021 – although this follows an accounting period of 18 months, making direct comparisons difficult.

In demand: Its distinctive dark blue tubs and small aromatherapy bottles are found in celebrity bathroom cupboards

In demand: Its distinctive dark blue tubs and small aromatherapy bottles are found in celebrity bathroom cupboards

He racked up a pre-tax loss of £939,000, while reducing the number of employees from 539 to 492.

The group has also received £1.7million in government support.

Neal’s Yard Remedies is already in talks with its bank and is “holding discussions to consider a range of positions or alternatives.”

The business is owned by members of the wealthy Kindersley publishing dynasty.

They tentatively said they would offer financial support. However, the accounts note that this “is not guaranteed”.

Fraser started the business – originally known as Neal’s Yard Apothecary – after being approached by the founder of Neal’s Yard Wholefoods – the late Nicholas Saunders.

Saunders asked him to take over a retail unit in the micro-village of Covent Garden, pledging a loan to do so.

The brand, which manufactures its products in an ‘eco-factory’ in Dorset, is known for items such as its £32 Frankincense face cream and £40 Wild Rose beauty balm, as well as its healing products natural. It carries on that tradition today with Bach flower remedies and aromatherapy oils, as well as treatments such as massages and facials at some of its approximately 40 UK outlets. Fraser sold the business to Peter Kindersley, the co-founder of publisher Dorling Kindersley, in 2005 so she could move to Devon to set up her own sustainable farm.

Although she had received other offers, she opted for Kindersley’s offer – estimated at £10 million – as she believed he would maintain the original spirit of the business.

In charge: Neal's Yard Remedies was sold to Peter Kindersley and his family in 2005

In charge: Neal’s Yard Remedies was sold to Peter Kindersley and his family in 2005

Kindersley is best known for the Dorling Kindersley range of non-fiction reference books for adults and children.

During his time at another publisher, Mitchell Beazley, he was responsible for the famous 1970s illustrated manual, The Joy Of Sex.

The businessman and his co-founding partner Christopher Dorling sold the publisher to Pearson in 2000, in a deal valuing the Kindersley family’s stake at £105 million.

Kindersley had set up his own organic farm, Sheepdrove, in Berkshire in the 1990s, where he grows vegetables.

He also launched an eco-center that hosts weddings, conferences and workshops.

Neal’s Yard is co-owned by members of the Kindersley clan, including Peter’s son, Barnabas, and daughter-in-law, Anabel.

Under their leadership, it has grown into a global brand that saw the United States become its biggest market last year.

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