Natura &Co significantly outperforms global CFT market in Q3 with strong sales growth and margin improvement

SÃO PAULO, Nov. 12, 2020 /PRNewswire/ — Natura &Co (NYSE – NTCO; B3 – NTCO3) posted a strong growth in revenue in the third quarter, significantly outperforming the global Cosmetics, Fragrance, and Toiletries market, as the sustained ramp-up in digital sales across all brands continued. Consolidated sales stood at R$10.4 billion, up 31.7% in Brazilian Reais and 11.6% at constant currency.

The Group also strengthened its capital structure with the successful completion in October of a US$1 billion capital raise. The transaction allows for balance sheet optimization by accelerating deleveraging while also enabling investments to drive growth in strategic priorities including Avon’s integration, Group digitalization, geographic expansion, and the Group’s 2030 Sustainability commitments.

A key sustainability milestone included Aesop’s certification as a B CorpTM; joining Natura, The Body Shop, and a movement of businesses dedicated to achieving the highest social, economic, and environmental standards.

Natura &Co also took another step forward in its continued digitalization with the launch of &Co Pay, its proprietary financial services platform. &Co Pay will help drive productivity to consultants and representatives by allowing them access to key financial services, promoting digital and financial inclusion. Launching first in Latin America, &Co Pay will be rolled out globally within the next couple of years.

Roberto Marques, Executive Chairman and Group CEO of Natura &Co, declared: “Enabled by continued digitalization, our brands delivered strong results in the third quarter, with significant growth in sales and margin improvement. In an environment that has remained challenging throughout the world as a result of the Covid-19 pandemic, we delivered superior results compared to the CFT market both globally and in Brazil. Our performance this quarter attests to the strength of our fundamentals, our unparalleled Direct-to-Consumer reach, and the resilience of our omnichannel, multi-brand model.”

Natura &Co’s consolidated net revenue growth was driven by outperformance by both Natura and Aesop, solid growth by The Body Shop, and growth in sales in Reais by Avon. Adjusted EBITDA was R$1,547.3 million, with margin of 14.8%, a gain of 330 basis points, driven by revenue growth, improved gross margin, and cost discipline across all businesses.

Even as many retail markets reopened, the Group experienced continued strong acceleration in digital social selling and e-commerce, with total e-commerce sales growing more than 115% in the quarter vs. the same period last year. At Natura and Avon combined, e-commerce sales grew more than 80% through consultants sharing their online stores. Online sales at Aesop were up 264%, and e-commerce sales at The Body Shop grew 103%. Digital social selling also progressed. At Avon globally, sales via representatives sharing e-brochures more than doubled, and the number of consumers accessing Avon’s e-brochure increased nearly 70% vs. Q3-19. At Natura, content sharing grew by more than 170% since the first quarter of this year, and the number of orders increased 45% vs. Q3-19 through the more than 1 million consultant online stores (+75% vs. Q3-19).

Natura &Co Latam’s net revenue increased by 29.5% in BRL. The Natura brand’s net revenue rose by a very strong 41.2% in BRL, supported by both Brazil (+30.5%), outperforming the domestic CFT market, and Hispanic Latam (+65.7%). The Avon brand’s net revenue increased by 19.3% in BRL (+9.9% at CC). Excluding the cyber incident effect that shifted R$390 million in sales to Q3, Avon sales were up 3.3%, including +6.1% in Brazil, its first growth in the country since Q4-18, thanks to increased representative numbers and higher activity. Adjusted EBITDA for Natura &Co Latam was R$1,002.8 million, up 96.1%, and adjusted EBITDA margin was 16.5% (+560 bps).

Avon International, which comprises Avon’s activities in 50 markets throughout Europe, Asia, Africa, and the Middle East, saw its Q3 net revenue grow by 22.5% in BRL as most markets showed signs of recovery. Excluding the positive phasing effect of R$60 million from the cyber incident, growth was 19.5%. Avon’s new brand campaign, Watch Me Now, premiered in September across more than 30 countries. Adjusted EBITDA was R$183 million, with 7.4% margin (-200 bps).

The Body Shop’s net revenue increased 51.9% in BRL, driven by a very strong performance in online and direct sales. Consumers continued to shift to e-commerce and At-Home (direct sales), with growth of more than 103% and 333%, respectively, significantly offsetting slower recovery of retail sales. At the end of the quarter, 97% of stores were reopened. Adjusted EBITDA in Q3 was R$308.3 million, with adjusted margin of 22.3% (+360 bps).

Aesop continued its success story from Q2, with strong double-digit growth in both sales and profitability in Reais. Net sales grew 67.2% in Q3 as a 264% increase in digital sales helped offset ongoing partial retail closures related to Covid-19 in major markets such as the US and Australia. 95% of the retail network had reopened at the end of the quarter. EBITDA in Q3 grew by 121.6% to R$154.4 million, with margin up 770 basis points to 31.3%. Aesop’s commitment to sustainable business practices was underscored by its certification as a B CorpTM on November 9.

About Natura &Co

Natura &Co is a global, purpose-driven, multi-channel and multi-brand cosmetics group which includes Avon, Natura, The Body Shop and Aesop. Natura &Co posted net revenues of R$ 14.4 billion in 2019 and R$32.9 billion on a proforma basis, including Avon. The four companies that form the group are committed to generating positive economic, social and environmental impact. For 130 years Avon has stood for women: providing innovative, quality beauty products which are primarily sold to women, through women. Founded in 1969, Natura is a Brazilian multinational in the cosmetics and personal care segment, leader in direct sales. Founded in 1976 in Brighton, England, by Anita Roddick, The Body Shop is a global beauty brand that seeks to make a positive difference in the world. The Australian beauty brand Aesop was established in 1987 with a quest to create a range of superlative products for skin, hair and the body.

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