13 January 2006 | Anusha Bradley

The Body Shop has cut its profit forecast for the year by 22 per cent following supply problems in North America.

It also follows disappointing Christmas sales performance in the UK and US.

The UK ethical beauty product retailer, which has stores in 53 countries, issued the profit warning to shareholders this week. This resulted in shares plummeting by almost 20 per cent.

In a statement, the firm said sales in the Americas region "underperformed expectations" because of fewer customers in shopping malls, and supply chain "execution issues", which meant some products were out of stock during the busy trading season.

It refused to expand on the problems beyond information contained in its Christmas trading update.

In a statement in the update, chief executive Peter Saunders said: "Action plans are now in place to rectify the supply chain issues in America."

The company now expects its operating profit to be level with, or "marginally ahead" of last year's profit of £39.2 million.

SMjan2006