Natura &Co, the parent company of direct selling organizations Aesop, Avon International and The Body Shop, announced a consolidated net revenue for the third quarter of 2022 of $1.69 billion, up 2.2% at constant currency. Net income during the quarter was $105 million with a solid cash position of $864 million.
The group’s digital presence had a significant impact on sales. Online, ecommerce, social selling and relationship selling through digital apps accounted for half of total net revenue, a slight increase from last year’s third quarter. Active Avon International representatives who logged in to the Avon On app at least once in the last three campaigns rose by almost 20% in the third quarter from last year.
Avon International’s net revenue was down by 8.1% in the third quarter, which the company attributes to conflict in Ukraine and low consumer confidence in Europe. As part of its efforts to improve profitability, the company is relocating its R&D operations to Brazil and Poland and outsourcing its IT infrastructure and services to global technology partners.
The Body Shop’s net revenue was down by 19.5% in the third quarter as the organization faced what it described as “post-lockdown channel rebalancing.” The company announced plans to implement strict cost containment, balancing inventory levels among head franchisees and continued store footprint optimization. The company’s new Workshop store is now showing a 15 percentage point bump in sales as compared to the traditional model.
Aesop’s net revenue increased by 21.5%, with all regions except Europe seeing double-digit growth. The company is still in the midst of a comparative study to decide between an initial public offering of Aesop or a spin-off to separate Aesop from Natura &Co.
“Natura &Co posted results in line with our expectations, with top line trending better, while margins continued to be pressured by the challenging macroeconomic environment marked by high inflation, lower discretionary spending and foreign exchange impacts,” said Fabio Barbosa, Group CEO of Natura &Co. “Natura &Co Latam posted solid performance, notably the Natura brand and the Avon CFT segment in the region. Aesop posted another consistent quarter of growth while Avon International showed another sequential improvement in results and in key channel indicators. On the other hand, The Body Shop continued to post challenging results amid channel decline in the At-home segment and slower franchise recovery. The Group reorganization that we announced last quarter has made good progress. We have significantly reduced operating costs at the Holding and continue to implement important steps to give each brand more autonomy and accountability. Other structural steps are also in motion: We are accelerating the integration of the Avon and Natura businesses in Latin America, starting in 2023 with Peru and Colombia, quickly followed by Brazil. We are continuing to optimize Avon International’s geographic footprint, with significant changes in markets such as India and Saudi Arabia. We also announced the closing of Avon’s Suffern R&D facility in the US and the outsourcing of Avon’s IT infrastructure. The Body Shop has taken steps to right size its organization and, as announced in the Material fact published on October 17th, we continue to analyze strategic alternatives for Aesop.”