Avon remains a drag on Natura &Co, “separation” continues to be a goal

Natura &Co may no longer own The Body Shop but it still has major UK and Europe ops via Avon International, although this isn’t performing as strongly as its own Natura business.

Overall, for its fiscal Q1, the Brazilian group’s losses widened due to falling sales at that Avon business.

In fact, the net loss widened more than 40% to BRL934.9 million (£144 million) in the first quarter of the year as net sales fell 5.7% to BRL6.1 billion (£937.73 million).

Avon International sales were down 13.1% at BRL1.3 billion (£214 million) or down 4.7% at constant currency.

But despite a decrease in revenue primarily attributed to challenges in the direct selling channel, “Avon showed resilience in other areas”. Efforts to strengthen gross margin and streamline operations led to only a slight decrease in the adjusted EBITDA margin.

The company is also actively exploring opportunities from other distribution channels, including retailers. Avon is already being sold in the UK via Superdrug, in Italy via Naima stores and in Turkey via representative’s retail franchise stores.

And it’s also “continuing to evolve on the studies of a potential separation of Avon and we will keep the market informed as soon as we conclude such studies,” it said.

As mentioned, the results for its operations in Latin America were better with Natura &Co Latam, Q1 revenues up 3.1% CC. 

Natura Brazil was again the highlight, reporting an 11.3% increase in Q1 revenues, despite the tough comparative base from the previous year.

However, Avon remained a drag in this region too and the strong result in Natura Brazil was offset by Avon Latam, “which is still delivering soft top-line”, with revenues down 11.3% in Brazil and 11.8% in Hispanic Latam.