The Body Shop franchisee faces prolonged weak consumer sentiment

Maybank IB said the regional cosmetic retailer may face a prolonged weaker consumer sentiment that could affect the recovery of sales for the group in the coming quarters.

PETALING JAYA: Maybank Investment Bank Research (Maybank IB) has placed a “hold” call on Innature Bhd with a target price of 35 sen, as challenging times are expected for the personal care retailer.

InNature Bhd is a franchisee for The Body Shop in Malaysia, Cambodia and Vietnam.

According to Maybank IB, the regional cosmetic retailer may face a prolonged weaker consumer sentiment that could affect the recovery of sales for the group in the coming quarters.

The research firm said this is due to a more cautious spending behaviour from consumers.

“Sales momentum will only see an uptick once international tourism improves (circa 15% of group sales pre-pandemic) or domestic consumer spending power increases,” it said.

Furthermore, a challenging operating environment in Cambodia and Vietnam is bound to keep the group’s earnings suppressed, according to the research house.

The group was awarded the franchise for Vietnam in 2009 and Cambodia in 2019.

However, the research firm said the group is on track with its environmental, social and governance (ESG) efforts as it takes sustainability seriously.

“InNature’s overall ESG score is 64 out of 100, which makes its ESG rating above average, under our proprietary ESG scoring methodology.

“As a beauty retailer, the group is not a large contributor to carbon emissions,” it said.

The group’s main environmental concerns include the use of virgin plastics for its product packaging as well as the disposal of it after being opened.

With the aim of mitigating this concern, the group is committed to converting all its product packaging to recyclable, reusable and compostable ones for better circularity.