Natura &Co, the parent company for The Body Shop, Aesop and Avon, released its financial results for the second quarter of 2022, posting net revenue of $1.6 billion and net income of $146.8 million.
Digitally-enabled sales accounted for a significant portion of the company’s total sales (49.5%) and were above pre-pandemic levels at all business units.
Avon International’s net revenue dipped by 11% in the quarter, mainly due to the ongoing conflict in Ukraine and diminishing purchase power in European households. The new commercial model that has been implemented in 16 markets did result in higher productivity and activity and a stabilized number of representatives outside of Europe.
Similarly, The Body Shop’s net revenue was down 11.8% in the second quarter, but store revenues were up compared to the same quarter last year. The company’s leadership is now focused on leveraging recent investments to drive store productivity, as well as store footprint optimization, margin improvement and a detailed review of SG&A costs.
Aesop had a strong quarter, with net revenue increasing 24.5% and all markets delivering double-digit growth.
“In my first few weeks as Group CEO, I have focused mainly on two priorities: the first is redesigning Natura &Co’s organizational structure to make it lighter and leaner,” said Fabio Barbosa, Group CEO of Natura &Co. “At this stage, we have mapped significant savings at the holding company level. If the company had implemented those changes last year the impact would have been an annualized reduction of at least 40% in recurring corporate expenses. Other changes and estimated savings will be announced later. The second is a review of the governance model and ways of working within Natura &Co, with the holding company strongly concentrated on defining key performance indicators, monitoring and tracking the performance of more autonomous brands, leading the allocation of resources within the group and continuing to promote our 2030 Commitment to life sustainability vision. We are confident that a leaner and a more agile structure, built on a strong foundation of accountability for results, will empower the business units to respond with agility to their current strategic and market challenges. At the same time, we are strongly focused on improving the fundamentals of our underperforming businesses, which we regard as our principal challenge and main upside driver. Though we expect our businesses’ revenues to trend better in the second half of the year, we believe the challenges in the macro environment will persist and our margins will remain pressured in the short term. In this context, our clear and immediate priority is to focus on margins and operational cash-flow, and the teams at all our brands and businesses are mobilized and incentivized on those clear goals.”
The Group ended the quarter with a net cash position of $824.3 million.