Body Shop and Aesop owner Natura highlights sales progress, despite overall falls


Natura &Co, the Brazilian beauty giant that owns The Body Shop, Aesop and Avon, talked of “a resilient performance” in Q4 with sales growth in constant currency and “continued progress in cash conversion”. But sales still fell on a reported basis and it made a net loss.

Consolidated net revenue was BRL10.39 billion (€1.8bn/£1.6bn/$1.9bn), up 3% at constant currency but down 10.8% in BRL, driven by double-digit constant currency (CC) growth at Natura &Co Latam and Aesop. 

The adjusted EBITDA margin was 10.5%, down 280 bps on the year, “reflecting a challenging environment and continued investments”. 

And the net loss was BRL890.4 million after a BRL695.5 million profit a year earlier, although the group ended the quarter with a solid cash position of BRL6 billion.

Key developments during the quarter included Aesop’s successful entry into the China market, “with initial performance above expectations”. 

CEO Fabio Barbosa said: “In the challenging environment we faced in 2022, we decided in mid-year to reassess the group’s growth model to enter a new stabilisation cycle. We continued to see very strong momentum at the Natura brand, especially in Brazil, and at Aesop, as well as a solid performance by Avon in the beauty category in Latin America, strengthening our confidence in the potential of the second wave of integration of our businesses in the region.

“At The Body Shop, we are rightsizing the business, focusing on efficiencies and the core retail model in the face of the challenging channel mix changes it has experienced.”

That last statement came as The Body Shop’s Q4 net revenue declined by 8.4% CC or 20.6% in BRL, “marking a sequential improvement over the previous quarter”. Combined sell-out sales of core business distribution channels (stores, e-commerce and franchise) dipped 4.8% CC, while The Body Shop at Home “is returning to pre-pandemic levels”. The adjusted EBITDA margin was 21.4%, down 80 bps year-on-year, but better than Q3’s 1,170 basis-point decline.

In early 2023, management announced the closure of the At-Home business in the US and of the UK distribution centre, and in February, the unit announced a restructuring of its global management structure and staffing cuts.

Meanwhile Aesop saw another quarter of double-digit CC growth, up 18.2%, but it fell 2.1% in BRL. All regions delivered double-digit growth and fragrance sales grew at more than twice the overall pace. The Q4 adjusted EBITDA margin was 28.6%, up 190 bps. 

Natura &Co Latam’s net sales were up by 10.6% CC, and down 3.2% in BRL. CC growth was driven by double-digit growth at the Natura brand, which grew by 17.5%, while the Avon brand was also up slightly, by 2.2%. 

Avon International’s revenue was down 9.9% CC and down 23.8% in BRL. This drop “continues to reflect the situation in Ukraine” (excluding that, CC sales were down 6.2%). The TMEA and APAC regions showed year-on-year growth, while Western Europe posted softer performance.

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