Natura &Co Q2 Results Exceed Expectations
Natura &Co’s consolidated sales in the second quarter of 2020 were R$7.0 billion, down only 12.7 percent despite the unprecedented global impacts of the COVID-19 pandemic.
Group e-commerce sales grew by about 225% in the quarter vs. the same period last year, with growth of 150% at Natura and Avon combined, 230% at the Body Shop and 430% at Aesop. Digital social selling also made major advances. At end-Q2-20, there were 889,000 Natura consultant online stores, 65% more than in Q2-19, and orders through these stores nearly tripled. The implementation of new features, such as the interactive e-brochure, has allowed the company to significantly grow sales through its digital platforms. The digitalization of Avon International representatives continued, and sales via the digital brochure in the quarter were more than triple those in Q2-19, while e-commerce sales more than doubled.
Natura &Co Latam’s net revenue was down 16.5% in BRL. The Natura brand’s net revenue increased by 4.4%, supported by a remarkable performance at Natura Brazil (+7.9%), driven by the strength of its digital relationship selling model, as well as successful and innovative Mother’s Day and Valentine’s Day campaigns. This helped offset a 3.6% drop in Hispanic Latam due to COVID-19 restrictions. The Avon brand’s net revenue declined 35.2% in BRL on a reduction in representatives across all markets in Latin America and COVID-19 impacts, as well as the cyber incident. Brazil dropped 31.1% while Hispanic Latam was down 37.8%. Q2-20 Adjusted EBITDA for Natura &Co Latam was R$373.2 million, and adjusted EBITDA margin was 9.4% (-320 bps). In H1, Natura &Co Latam’s net revenue was down 7.8% in BRL and adjusted EBITDA was R$660.9 million, with adjusted EBITDA margin of 8.1% (-160 bps).
Avon International, which comprises Avon’s activities in 50 markets throughout Europe, Asia, Africa and the Middle East, saw its Q2 net revenue decrease by 21.6% in BRL. The decrease was caused by a combination of lower representative activity related to COVID-19 impact and the cyber incident. Representatives increased adoption of digital assets and sales via the digital brochure more than doubled in the quarter vs Q1. Adjusted EBITDA was R$72.6 million, with 4.4% margin. In H1, net sales were down 11.9% and adjusted EBITDA margin was 4.7% (-840 bps).
“Our continued efforts to accelerate the digital transformation of our businesses enabled us to largely offset store closures, ensure business continuity and deliver market outperformance during a period in which much of the world faced continued lockdown measures,” said Natura &Co Executive Chairman and Group CEO Roberto Marques. “Every brand and business in the Group became truly omnichannel during the second quarter and—given the circumstances—helped deliver a robust and competitive overall performance, both in terms of sales and EBITDA.”
Marques said that to further develop the company’s omnichannel model, it will continue making significant investments in digital and IT thanks to its successful capital raise. He announced two strategic partnerships: with Vayner Media, a global powerhouse in social media, which will include digital support for the Avon brand relaunch, and with Singu, a leading Brazilian digital platform for at-home beauty services.