Natura &Co, the parent company of Avon, The Body Shop and Aesop, reported an 11% decline in net revenues in the fourth quarter of 2022 and a net loss of $169.7 million. This loss is a significant drop from the net profit of $133 million in net profit reported in the same period of 2021.
Net revenue for Avon International and The Body Shop both declined more than 20% in BRL during the quarter and 9.9% and 8.4% at constant currency, respectively. For the full year, Avon International posted a net revenue decline of 22.9%. The Body Shop also saw a significant decline in full year net revenue of 24.3%.
Aesop revenues were more stable, with fourth quarter net revenues that saw a 2.1% decline in BRL but an 18.2% increase in constant currency. For the full year, Aesop net revenues experienced a 4.6% increase in BRL, or 21% increase at constant currency.
Although the company wields an omnichannel strategy, traditional direct selling still generates 70% of the company’s overall net revenue. Retail was the second greatest revenue generator at 19%.
“We started 2022 navigating in a challenging macroenvironment, which worsened with the war in Ukraine, and uncertainty surrounding the performance of a few business units after a post-pandemic change in consumer behavior,” said Fabio Barbosa, Natura &Co Group Chief Executive Officer. “In this environment, we decided in mid-2022 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 (with incentives adjusted accordingly), a revision of the cost structure and the role of the Holding company, alongside important revisions in our global footprint in order to position the business for success going forward.”
The company also announced its plans for restructuring the brands to maximize shareholder value and streamline efficiencies within key retail channels.
“Structural steps to create sustainable shareholder value are in motion in all our brands,” Barbosa said. “At Natura &Co Latam, we are accelerating the integration of Natura and Avon in order to capture the full benefits of the combination in the region. At Aesop, we are evaluating strategic options aiming to improve the company’s capital structure. At Avon International, we are continuing to optimize 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 the core retail model in the face of the challenging channel mix changes it has experienced.”