Natura &Co recorded a slight sales decline in the third quarter, but posted strong growth in the first nine months of the year and compared to Q3 two years ago, prior to the onset of the pandemic. On a year-to-date basis, net income improved by over $1 Billion Reais, despite short-term cost pressure.
 
Consolidated net revenue in Q3 stood at R$9.5 billion ($1.75 billion), down 4.2% in BRL and 4.5% at constant currency, reflecting a record-high comparable base as Q3-20 was up by 26% (+6.7% at constant currency).
 
Digitally-enabled sales, which include online sales (e-commerce + social selling) and relationship selling using the company’s main digital apps, reached 52% of total revenue. Net income was R$272.9 million ($50.31 million) compared with R$381.7 million ($70.37) in Q3 of last year.
 

Segments

Natura &Co Latam’s net revenue decreased by 2.4% in BRL in Q3 but was up 14.4% over nine months.
 
Avon International’s net revenue decreased 14.3% in Q3 but was up 6.3% in the first nine months. Key markets such as the UK, South Africa and the Philippines gained market share this quarter and in the nine months.
 
The Body Shop posted another solid performance, with net revenue up 0.4% in BRL in the quarter and 20.6% in the nine months.
 
Aesop posted another excellent quarter, with net revenue increasing 12% in BRL in Q3 and 39.8% over nine months.
 

Comments from CEO

Roberto Marques, executive chairman and group CEO, declared, “Despite a very tough comparable vs last year, when we grew over 20%, and some persistent external headwinds related to the global pandemic, Natura &Co continues to progress on its key initiatives, attesting to the underlying strength of our business.”
 
“We again outperformed the global Cosmetics, Toiletries and Fragrances market on a year-to-date basis and versus pre-pandemic levels, all our brands and businesses posted growth over nine months and the Group’s digitalization continued to advance. We also made major headway on the integration of Avon,” Marques continued. “With a further roll-out of Avon’s new commercial model, continued deployment of social selling tools at Natura, new conversions to The Body Shop’s new store concept and preparations for an entry onto the Chinese market at Aesop well underway, we have a number of initiatives to fuel growth in 2022 and beyond.”
 

Outlook

The Group has updated its medium-term guidance. It remains confident in its ability to drive top-line growth and achieve its target of growth in the high single digits over the coming years. It is also confident on showing margin progression over time, but it now expects to achieve adjusted mid-teens adjusted EBITDA margin in 2024, versus 2023 previously, as a result of the challenging operating environment, with inflation, supply chain disruption and foreign currency headwinds.