05.13.24
Natura &Co released its first quarter financial results for 2024 (Q1-24), which showed increased profitability driven by integrating Natura and Avon in the Latam region (referred to as 'Wave 2').
Natura &Co’s consolidated net revenue reached $1.2 billion (BRL 6.1 billion) in Q1-24, up 1.1% vs Q1-23 in constant currency (CC) and down 5.7% year-on-year (YoY) in Brazilian Reais (BRL).
Q1-24 reported a net loss of $182 million (BRL 935 million), which was impacted by discontinued operations, higher taxes from country mix, and FX losses and hyperinflation accounting impacts.
Fabio Barbosa, Group CEO of Natura &Co, commented:
"We are encouraged that the first quarter of the year showed positive recurring results with a consolidated margin expansion of 110 bps vs the previous year, driven by solid results from Natura &Co Latam, benefiting from the Natura and Avon integration in the region, coupled with richer country and brand mix. This more than offset the margin contraction at Avon International amid sales deleveraging.”
Avon Latam revenues were down 11.3% in Brazil and 11.8% in Hispanic Latam, as a result of the impacts in the regions where Wave 2 was already implemented. The Group also noted that Avon Brazil already showed improving top-line trends throughout the quarter.
Avon International was down by 4.7% YoY in CC, primarily attributed to challenges in the direct selling channel. Efforts to strengthen gross margin and streamline operations led to a slight decrease in adjusted EBITDA margin. The company is also actively exploring opportunities from other distribution channels, including retailers.
Avon is already being sold in the UK via Superdrug, in Italy via Naima stores, and in Turkey via representative's retail franchise stores.
Barbosa added:
“The ongoing roll-out of Wave 2 is a pivotal step in our transformational process, and although we have experienced expected and unexpected challenges in its implementation, we continue to see sustainable improvements in key metrics such as productivity, cross-selling, and better portfolio mix, resulting in gross margin improvement in all countries where Wave 2 was implemented… As expected, our integration initiative is driving improved savings in both G&A and selling expenses, although the latter is being offset by higher marketing investments and other initiatives focused on improving service levels.”
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Natura &Co’s consolidated net revenue reached $1.2 billion (BRL 6.1 billion) in Q1-24, up 1.1% vs Q1-23 in constant currency (CC) and down 5.7% year-on-year (YoY) in Brazilian Reais (BRL).
Q1-24 reported a net loss of $182 million (BRL 935 million), which was impacted by discontinued operations, higher taxes from country mix, and FX losses and hyperinflation accounting impacts.
Fabio Barbosa, Group CEO of Natura &Co, commented:
"We are encouraged that the first quarter of the year showed positive recurring results with a consolidated margin expansion of 110 bps vs the previous year, driven by solid results from Natura &Co Latam, benefiting from the Natura and Avon integration in the region, coupled with richer country and brand mix. This more than offset the margin contraction at Avon International amid sales deleveraging.”
Results by Brand
Natura &Co Latam Q1-24 revenues grew 3.1% YoY in CC. Natura Brazil reported an 11.3% YoY increase in Q1-24 revenues. The brand opened 132 stores over the past year, which contributed to growth. Results were also boosted by the successful launch of a fragrance sales campaign called "Perfumada", which contributed to a richer product mix.Avon Latam revenues were down 11.3% in Brazil and 11.8% in Hispanic Latam, as a result of the impacts in the regions where Wave 2 was already implemented. The Group also noted that Avon Brazil already showed improving top-line trends throughout the quarter.
Avon International was down by 4.7% YoY in CC, primarily attributed to challenges in the direct selling channel. Efforts to strengthen gross margin and streamline operations led to a slight decrease in adjusted EBITDA margin. The company is also actively exploring opportunities from other distribution channels, including retailers.
Avon is already being sold in the UK via Superdrug, in Italy via Naima stores, and in Turkey via representative's retail franchise stores.
Barbosa added:
“The ongoing roll-out of Wave 2 is a pivotal step in our transformational process, and although we have experienced expected and unexpected challenges in its implementation, we continue to see sustainable improvements in key metrics such as productivity, cross-selling, and better portfolio mix, resulting in gross margin improvement in all countries where Wave 2 was implemented… As expected, our integration initiative is driving improved savings in both G&A and selling expenses, although the latter is being offset by higher marketing investments and other initiatives focused on improving service levels.”
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