Strong growth by Natura &Co Latam and
Aesop, which made a successful entry into China in Q4; further improvement
in Avon fundamentals and growth in
the Beauty category
SÃO PAULO, March 14, 2023
/PRNewswire/ -- Natura &Co (NYSE – NTCO; B3 – NTCO3) posted a
resilient performance in the fourth quarter, with sales growth in
constant currency and continued progress in cash conversion, in
line with its strategic priority.
Natura &Co posted Q4 consolidated net revenue of
R$ 10.39 billion, up 3% at constant
currency (-10.8% in BRL), driven by double-digit constant currency
(CC) growth at Natura &Co Latam and Aesop. Adjusted EBITDA
margin was 10.5%, down 280 bps vs the same period last year,
reflecting a challenging environment and continued investments. Net
income was R$ (890.4) million and the
Group ended the quarter with a solid cash position of R$ 6 billion.
A key highlight of the quarter was Aesop's successful entry in
the China market, with initial
performance above expectations. Digital also continues to progress:
At Natura Latam, the penetration of digital (consultants who logged
in at least once to the digital catalog or the app during the
quarter) reached 82.1% in Q4 compared to 80.5% in Q4-21. At Avon
International, penetration of the Avon On app (active
representatives who logged in at least once in the last three
campaigns) reached 30.6%, compared to 25.5% in Q4-21.
Fabio Barbosa, Group CEO of
Natura &Co, declared: "In the challenging environment we faced
in 2022, we decided in mid-year to reassess the group's growth
model to enter a new stabilization cycle. Important changes were
carried out, such as a stronger focus on profitability and cash
conversion, a revision of the cost structure and the role of the
Holding company, alongside important revisions in our footprint
worldwide to position the business for success going forward.
FY2022 showed stable revenue at constant currency while adjusted
EBITDA margin decreased 160 bps. In the fourth quarter, sales
growth improved at constant currency and we delivered further
progress in cash conversion, in line with our priorities. We
continued to see very strong momentum at the Natura brand,
especially in Brazil, and at
Aesop, which successfully entered the China market in Q4, 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.
Structural steps to create sustainable shareholder value are in
motion in all our brands. At Natura &Co Latam, we are
accelerating the integration of Natura and Avon in order to capture the full benefits of
the combination. At Aesop, we are evaluating strategic options
aiming to improve the Company's capital structure. At Avon
International, we are further optimizing its geographic footprint
in order to concentrate on profitable markets while reducing the
cost structure. At The Body Shop, we are rightsizing the business,
focusing on efficiencies and in the core retail model in the face
of the challenging channel mix changes it has experienced.
We are confident that the actions we are taking will position
Natura &Co to return to growth. While we expect 2023 to be
another challenging year, our priorities of focusing on cash
generation and improving the Company's capital structure will allow
us to invest in our priorities, building the path to unlock
significant value. We expect a continuous improvement in revenues,
as well as better adjusted profitability and cash generation, while
continuing to invest in transformational actions..
At the same time, the Group continues to focus on what made the
group what it is today, its ESG agenda. Recently, the Avon
Foundation, The Body Shop and Aesop used their networks to make
donations to the victims of the earthquakes in Turkey and Syria through such institutions as the Red
Cross and Médecins sans Frontières. Natura &Co matched those
efforts to support humanitarian relief. We remain as focused
as ever on our commitment to our environmental agenda, the Amazon
and its biodiversity, social inclusion and female empowerment that
are core elements of Natura &Co's DNA and true sources of
competitive advantage."
Performance by business unit:
Natura &Co Latam's net sales were up by 10.6% in
constant currency ("CC) and down 3.2% in BRL. CC growth was driven
by double-digit growth at the Natura brand, which grew by 17.5% at,
while the Avon brand was also up slightly, at +2.2%. The Natura
brand posted strong momentum, with growth of 17.9% in
Brazil, supported by price
increases, mix effects, as well as 14.9% growth in consultant
productivity in Q4. In Hispanic Latam, net revenue was up 16.9% at
constant currency despite a challenging situation in several
countries, driven by Argentina,
Colombia and Mexico. The Avon brand in Brazil entered positive territory in Q4,
growing by +7.5%, albeit on a soft comparable base. The Beauty
segment continued to grow, accelerating to +12%, while Fashion and
Home (F&H) was down 10%, in line with our portfolio
optimization strategy. In Hispanic markets, net revenue was down
1.1% at CC (-19.5% in BRL). Performance was good in
Argentina, but impacted by a
decrease in Mexico, Peru and Chile. The Beauty category grew 7.3% in
constant currency, but this was more than offset by F&H.
Adjusted EBITDA margin was down 320 basis points to 8.9%. Margin
benefited from strong top line performance and strict financial
discipline, but this was more than offset by a 60 basis-point drop
in gross margin and higher General & Administrative expenses as
a percentage of net revenues, mainly driven by higher investments
in R&D, notably at the Natura brand, where we are accelerating
investments in marketing and innovation.
Avon International's revenue was down 9.9% at CC (-23.8%
in Reais.) 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. However, even in a tough macro
environment, Avon International was able to pass through inflation
and FX pressure to prices, which also benefits rep productivity.
Digitalization is progressing and the use of digital tools reached
30.6%. Adjusted EBITDA margin was 5.8%, down 490bps, as gross
margin expansion of 230 bps and continued focus on transformation
savings were more than offset by the sales decrease and other
factors.
The Body Shop's Q4 net revenue declined by 8.4% at
constant currency (-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) were down
by a more moderate 4.8% in constant currency, while The Body Shop
at Home is returning to pre-pandemic levels. Adjusted EBITDA margin
was 21.4%, down 80 bps year-on-year, while Q3 had seen a 1,170
basis-point decline, thanks to efficiency gains. Management is
focused on stabilizing core distribution channels top line and the
implementation of cost savings initiatives to deliver margin
expansion and support cash generation. In early 2023, management
announced the closure of the At-Home business in the US and of the
dedicated distribution center in the UK, and in February, the
company announced a restructuring of its global management
structure and staffing cuts.
Aesop again recorded another quarter of double-digit
growth in constant currency, up 18.2% (-2.1% in BRL). All regions
delivered double-digit growth despite the challenging environment.
Fragrance sales grew at more than twice the overall pace, aligned
with Aesop's category diversification strategy. Q4 adjusted EBITDA
margin was 28.6%, up +190 bps even while continuing to invest for
future sustainable growth. The highlight of the quarter was Aesop's
successful China market entry,
with the launch of two physical stores, along with the Aesop.com
platform and a domestic T-Mall operation. Performance has exceeded
expectations and the stores are already the top two sellers of
Aesop's 287 signature stores worldwide. As mentioned in the
November 30, 2022 notice to the
market, Natura & Co continues to evaluate strategic
alternatives for Aesop, including a possible sale of a stake in the
company.
About Natura &Co
Natura &Co is a global,
purpose-driven, multi-channel and multi-brand cosmetics group which
includes Avon, Natura, The Body
Shop and Aesop. Natura &Co posted net revenues of R$36.3 billion in 2022. The four companies that
form the group are committed to generating positive economic,
social and environmental impact. For 136 years Avon has stood for women: providing
innovative, quality beauty products which are primarily sold to
women, through women. Founded in 1969, Natura is a Brazilian
multinational in the cosmetics and personal care segment, leader in
direct sales. Founded in 1976 in Brighton, England, by Anita Roddick, The Body Shop is a global beauty
brand that seeks to make a positive difference in the world. The
Australian beauty brand Aesop was established in 1987 with a quest
to create a range of superlative products for skin, hair and the
body.
View original
content:https://www.prnewswire.co.uk/news-releases/natura-co-posts-constant-currency-sales-growth-and-continuous-improvement-in-cash-conversion-in-q4-301770871.html