Natura & Co’s losses widened in Q1 2024, with lagging sales at Avon International also dragging down revenues.
Net loss was reported at R$935m (US$181m), a 43% increase on the R$652m seen during the same period last year.
The Brazilian brand owner’s sale of The Body Shop in November last year, in addition to higher tax rates and hyperinflation, contributed to the rise in losses.
Revenues also sank by 5.7% to R$6.1bn, attributed to a challenging quarter for Avon International.
The direct selling giant’s beauty sales were down 4.2%, affected by less representative activity and a reduction in promotional marketing in Q1.
“Avon International had another challenging quarter with top-line down, impacted by a steep fashion and home decline and a softer impact of CFT categories,” said Fábio Barbosa, Group CEO of Natura & Co.
“The management team is working on simplifying the market, focusing on key countries, and enhancing our portfolio with superior promotional execution.”
Avon’s sales in the Hispanic market took a particular hit as well, down 24.5% year-on-year, as Natura & Co continues to implement its Wave 2 roll-out.
Wave 2 is a strategic project that aims to combine Avon and Natura brands in the region.
“Although we have experienced expected and unexpected challenges in its implementation, we continue to see sustainable improvements in key metrics such as productivity, cross selling and better portfolio mix,” added Barbosa.
A solid performance from Natura & Co Latam helped to slightly offset the group’s revenue declines, however.
Sales at Natura Brazil were also up 11.3% compared to the same period last year.
Despite the mixed performance, Barbosa said he remains confident in his outlook for the remainder of the year.
He added: “The solid start to the year gives us confidence that the initiatives we are implementing are beginning to deliver the expected results and we remain extremely confident with the potential of the integration of both brands in Latam.”
It comes after Natura & Co reported net losses of R$2.7bn in its final quarter of 2023.
The Brazilian beauty brand owner suffered a R$1bn hit to its bottom line “associated with discontinued operations”.
It also saw an R$664m impairment related to its Avon business during the quarter.