Natura &Co Q2 2022: sales stabilize as Natura and Aesop thrive

Natura &Co Q2 2022: sales stabilize as Natura and Aesop thrive

THE WHAT? Natura &Co has reported its results for the second quarter of the current financial year. The Brazilian owner of The Body Shop saw sales rise 0.4 percent in  constant currency to R$8.7 billion. Adjusted EBITDA margin was 8 percent (down 50bps).

THE DETAILS Both Avon International and The Body Shop saw sales decline in the region of 11 percent, with the former citing the war in Ukraine as the principal reason for the drop, while the ethical beauty brand said that its sales had been mainly impacted by post-lockdown channel rebalancing.

Aesop posted another excellent quarter with net revenue up 24.5 percent in constant currency, with all markets delivering double digit growth. The Natura brand also posted strong growth, with revenue up 14.8 percent.

THE WHY? Fabio Barbosa, Group CEO of Natura &Co, revealed, “In my first few weeks as Group CEO, I have focused mainly on two priorities: the first is redesigning Natura &Co’s organizational structure to make it lighter and leaner. At this stage, we have mapped significant savings at the holding company level. If the Company had implemented those changes last year the impact would have been an annualized reduction of at least 40 percent in recurring corporate expenses. Other changes and estimated savings will be announced later. The second is a review of the governance model and ways of working within Natura &Co, with the holding company strongly concentrated on defining key performance indicators, monitoring and tracking the performance of more autonomous brands, leading the allocation of resources within the group and continuing to promote our 2030 Commitment to life sustainability vision. We are confident that a leaner and a more agile structure, built on a strong foundation of accountability for results, will empower the Business Units to respond with agility to their current strategic and market challenges. At the same time, we are strongly focused on improving the fundamentals of our underperforming businesses, which we regard as our principal challenge and main upside driver.

“Though we expect our businesses’ revenues to trend better in the second half of the year, we believe the challenges in the macro environment will persist and our margins will remain pressured in the short term. In this context, our clear and immediate priority is to focus on margins and operational cash-flow, and the teams at all our brands and businesses are mobilized and incentivized on those clear goals.”