Avon’s Impact on Natura &Co Persists, Pursuit of “Separation” Remains a Priority

blog image

Avon’s Impact on Natura &Co Persists: Natura &Co, though no longer the owner of The Body Shop, maintains significant operations across the UK and Europe through Avon International. However, it’s noteworthy that Avon International’s performance is not as robust as Natura’s own business.

Avon, a subsidiary of the Brazilian conglomerate, faced widening losses in its fiscal Q1, mainly due to declining sales within its Avon division. The net loss surged over 40% to BRL934.9 million (£144 million) during this period, as net sales dwindled by 5.7% to BRL6.1 billion (£937.73 million).

Despite the revenue challenges, particularly within the direct selling channel, Avon has shown remarkable resilience. Initiatives aimed at fortifying gross margins and optimizing operations have resulted in only a marginal decrease in the adjusted EBITDA margin, demonstrating the company’s ability to adapt and overcome.

Avon is actively exploring alternative distribution channels, including partnerships with retailers, to mitigate these challenges. This strategic move holds significant potential, with its products already available in regions such as the UK, Italy, and Turkey through partnerships with entities like Superdrug, Naima stores, and representative’s retail franchise stores.

The company is also contemplating a potential separation of Avon, and studies are ongoing. Any developments in this regard will be promptly communicated to the market.

Despite the setbacks in Avon’s performance, the results from operations in Latin America under Natura &Co were comparatively favorable. In Q1, revenues for Natura &Co Latam saw a 3.1% increase at constant currency rates. Notably, Natura Brazil emerged as a standout performer, registering an impressive 11.3% revenue growth in Q1 despite facing tough comparisons from the previous year.

However, the challenges posed by Avon persisted in this region as well. Natura Brazil’s robust performance was counterbalanced by the struggles of Avon Latam, which experienced a soft top-line, with revenues plummeting by 11.3% in Brazil and 11.8% in Hispanic Latam.

In essence, while Natura & Co. continues to navigate the complexities of the beauty and personal care industry, the performance of its subsidiary, Avon, remains a focal point for strategic assessment and potential restructuring.

Ethan Sullivan

Ethan's penchant for the pulse of the fashion world extends to covering lifestyle topics, offering readers a seamless blend of the latest style updates and lifestyle trends.

Read more