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Mar 10, 2022
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Natura profits grow despite some sales drops, takes action on Russia

Mar 10, 2022

Body Shop, Avon and Aesop owner Natura & Co has turned in mixed results for Q4 and 2021, although on the plus side, net income in the fourth quarter more than tripled, and it reached R$1 billion (€180m/£151m/$199m) in the full year.

The Body Shop

This was despite short-term cost pressure and it meant the firm reversed its R$650.2 million net loss of the previous year. Its strong focus on cost discipline also allowed it to post an EBITDA margin gain of 90 basis points in Q4. Yet it saw a sales decline in the period.

Looking at Q4, group consolidated net revenue was R$11.6 billion, down 3% on the year or 5.3% at constant currency. But net income reached R$695.4 million, an increase of 292% over the previous year's R$177.4 million.  

In the full year, consolidated net revenue reached R$40.1 billion, up 8.8% in BRL and 3.8% at constant currency, driven by growth in Hispanic markets and at Avon. Digitally-enabled sales and relationship selling using its main digital apps, reached 52% of total revenue. 


The Natura & Co unit’s Latin American net revenue decreased by 2.8% in BRL in Q4 but was up 9.1% in the full year. Hispanic markets accounted for more than half of net revenue for the first time, at 52%.

The Avon brand's revenue was down 12.3% in BRL in Q4 but grew by 6.6% in the year, with solid growth in Hispanic markets in the year. Avon International's net revenue decreased 5.6% in BRL in Q4 but was up 2.5% in the full year.  

The Body Shop's net revenue was down 8.8% in BRL in Q4 but was up 9.2% in the full year. The Q4 performance was impacted by the Omicron wave in the holiday season, notably in the UK. But it had a strong Christmas campaign, with 12% growth over the previous year.  Online and At-Home channels were still 1.5 times above pre-pandemic levels despite “channel rebalancing” with the reopening of stores.

And Aesop posted another “excellent quarter”, with net revenue increasing 22.8% in BRL in Q4 and 33.4% in the full year. It continued to show strong momentum, posting revenue growth, notably in Asia and North America. The share of online was 1.5 times above pre pandemic levels at 24%.

Describing the environment as “challenging”, the company said it continued in the latest quarter “to make major advances on key strategic initiatives that will fuel future growth”. It said a key highlight “is the progress made on Avon's turnaround, with the implementation of the new commercial model in several key markets, both in Latin America and at Avon International, with positive initial signs, and an acceleration in digital tools”. 

Planned synergies are ahead of plan, with close to 50% of the overall target already achieved at year-end, helping Natura & Co offset raw material inflation and foreign currency headwinds.


Natura added that “in the face of the Ukraine and Russia conflict, [it] has already made significant donations to relief organisations acting on the ground in Ukraine, mainly the Red Cross, and is also donating products to refugees”.

Both markets are important for Avon, but represent less than 5% of total revenue for the group. It’s also suspending operations in Russia for The Body Shop and Aesop via its Head Franchises, and Avon is suspending exports “while continuing to support the social selling operations of its representatives via its local plant to provide them with financial support”. That's all likely to hit 2022 revenues.

“The geopolitical situation adds new challenges to our businesses, beyond headwinds in supply chain, rising inflation, new pandemic restrictions and weak consumption in Brazil that has a strong effect on the CFT market”, it said. “However, our focus on costs and continued transformational changes allowed us to significantly expand our EBITDA margin and net income in the fourth quarter of 2021.” No future outlook was provided.

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