Body Shop’s profits slumped from €64m in 2007 to €36m in 2008, dragging down the performance of parent company L'Oreal.

Like-for-likes declined 1 per cent in the fourth quarter, while sales fell 8 per cent.

Owner L’Oreal blamed the poor performance on the weak market in Britain, Spain and North America, as well as the fall in the pound.

The French company,which has repeatedly boasted double digit growth, yesterday apologised for missing an internal sales target of 4 per cent.

Body Shop’s founder, the late Anita Roddick, sold the chain to L’Oreal for£652m almost three years ago, when the high street was booming. But Body Shop has suffered in recent years, with supermarkets stocking health and beauty products and new chains springing up, competing in the same market.

Observers say sales of beauty products should be on the increase, thanks to a phenomenon known as the “lipstick effect”, where women trade down and buy make up - as opposed to big ticket items - in times of recession.