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Natura &Co Q1 2022 Revenue Declines As Inflation Rises

Global beauty company Natura &Co, owner of Aesop and The Body Shop, has shared its results for the first quarter of fiscal 2022.

Consolidated net revenue totaled R$8.3 billion ($1.6 billion), a decline of 12.7% year over year, due to the appreciation of the Brazilian Real, and down 4.6% in constant currency. The quarter was impacted by rising inflation affecting discretionary spend on key markets, cost pressures in the supply chain and the first effects of the war in Ukraine.

“Natura &Co continued to face a challenging environment in Q1-22, on top of a very tough comp and unfavorable currency movements. Our performance reflects intentional ongoing changes at the Avon business, such as portfolio simplification and the new commercial model implementation, as well as the impacts of the war in Ukraine, which added to inflationary pressures and affected consumer demand, besides some lingering effects of the Covid -19 pandemic,” said Roberto Marques, group CEO and executive chairman of Natura &Co.

Business Units

Natura &Co Latam net revenue was down 1.9% in Q1 2022 in BRL and up a solid 5.3% at constant currency, reflecting the appreciation of the BRL versus Hispanic market currencies.

Avon International Q1 net revenue was down 22.1% in BRL (-10.1% at CC), mainly impacted by the war in Ukraine, lower disposable income in Europe from rising inflation and fewer representatives, reflecting a higher comparable base last year when the channel benefited from lockdowns, as well as intentional optimization linked to the implementation of the new commercial model.

The Body Shop Q1 net revenue declined 22.9% in BRL (-16.0% at CC), mainly impacted by expected channel rebalancing, with retail recovery not enough to offset the declines in TBS At Home, e-commerce and head franchisees, as well as lower disposable income in Europe.

Aesop Q1 net revenue increased 9.6% in BRL (+21.3% at CC, accelerating compared to Q4-21). All markets delivered double digit growth, led by North America and APAC. Aesop consistently posted superior sales growth relative to global luxury brands.

Outlook

“We expect the environment to remain challenging in Q2 and will continue to take measures including further cost containment and strict financial discipline on investments in order to protect our profitability and cash generation,” commented Marques. “We also expect to see further gains from Avon’s transformation in the second half of 2022, with continued improvement in its fundamentals and leading indicators, which are already heading in the right direction, in addition to a more favorable comparable base for the group.”

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