Betterware de Mexico posted its third quarter financial results, revealing net revenue of $75 million, a $43.9 million decline since the same quarter in 2021. Gross margin declined 240 basis points to 54% during the third quarter, compared to 56% during Q3 of last year. The company attributes this decrease to a 150 basis points of negative impact inflicted by promotional activities aimed at reducing excess inventory and 147 basis points of negative impact from exchange rate devaluation.
The company’s EBITDA was $13.4 million, a 62% decrease from the third quarter of last year, but the company’s expense restructuring process is expected to allow the brand to achieve full year 2022 EBITDA in the range of $70.5 million-$80.5 million, with a margin of 22-25%, before resuming growth and increased profitability in 2023.
The company’s growth metrics are still ahead of its pre-pandemic numbers: Q3 2022 net revenue is 116% above that of Q3 2019 and Q3 2022 EBITDA is 107% greater than Q3 2019. Distributor and associate numbers have grown 134% and 148% respectively since 2019.
JAFRA Mexico showed strong performance ahead of the company’s expectations, with a net revenue year-over-year growth of 22%. JAFRA USA is still a small portion of the Group, accounting for around 7% of net revenues, but the company’s management team is focused on mirroring JAFRA Mexico’s business model to improve inefficiencies that existed prior to Betterware’s acquisition of the brand.
Betterware stated that its U.S. launch is on track for late 2023, with expectations for continued international expansion into South America—specifically Colombia and Peru—between 2025 and 2026. JAFRA is expected to launch in Guatemala next year.
“The third quarter saw significant progress toward our strategy, and we believe we are in position to resume revenue and profit growth,” said Luis G. Campos, Executive Chairman of the Board. “Operationally, the quarter saw stabilization in Betterware’s sales force levels; a better-than-expected performance from JAFRA, our newly acquired business, and compelling innovation in our products and categories. Financially, we began activities that have us on track to improve cash flow and increase ongoing profitability through acquisition synergies, permanent cost reductions and improved inventory management. Structurally, the Jafra acquisition provides compelling product portfolio complementarity to the whole Group, contributing to our financial strength in changing business environments. While the macro-economic environment remains challenging, we are confident that the actions we have taken will make our company even stronger as we maximize the power of our disruptive business and leverage the combined operations of Betterware and JAFRA group, which accelerates our geographic expansion into the US and extends our categories served to include the beauty industry. We expect the implementation of our strategy to deliver sustained long-term profitable growth and increased value for our shareholders.”
