The Body Shop experienced a fourth consecutive quarter of declining sales, with the brand now exploring cost savings initiatives to mitigate the losses
Avon International's revenues decreased by 9.9% during Q4 trading
The brand owner saw sales decline by 10.7% to R$10.39bn compared with 2021, but increased by 3% in constant currency.
Gross profit also slumped by 11.6% to R$6.6bn, impacted by The Body Shop’s weak performance during the period.
The sales declines were offset by Aesop’s entry into the Chinese market, which resulted in double digit growth of 18.2% for the Australian luxury cosmetics brand.
The Natura Latam shopping app also reported a sales boost of 10.6% during the period, which benefited from strong customer engagement.
This combined performance helped to mitigate losses from a fourth consecutive quarter of stagnating sales at The Body Shop.
The Body Shop saw revenues decline by 8.4% at constant currency, and the brand is now exploring cost savings initiatives to deliver margin expansion and increase cash generation.
The decline follows job cuts at The Body Shop as 25% of its leadership team and 12% overall staff were made redundant in February.
The Body Shop also closed its At-Home business in the US and its dedicated distribution centre in the UK.
"In the challenging environment we faced in 2022, we decided in mid-year to reassess the group's growth model to enter a new stabilisation cycle,” said Fabio Barbosa, Group CEO of Natura & Co.
“Important changes were carried out, such as a stronger focus on profitability and cash conversion, a revision of the cost structure and the role of the Holding company, alongside important revisions in our footprint worldwide to position the business for success going forward.”
Avon International's revenues were also down 9.9%, attributed to the ongoing conflict in Ukraine.
The decrease was mitigated slightly by strong beauty sales in the Latin America market.
“We are confident that the actions we are taking will position Natura & Co to return to growth,” added Barbosa.
“While we expect 2023 to be another challenging year, our priorities of focusing on cash generation and improving the company's capital structure will allow us to invest in our priorities, building the path to unlock significant value.”
In December 2022 Natura & Co revealed that it was considering selling a minority stake of beauty brand Aesop.
The brand owner was initially exploring an initial public offering (IPO) for Aesop, but the volatility of the market at the time caused the company to reassess its focus.
However, Natura & Co said it is also continuing to evaluate strategic alternatives for Aesop in 2023, including the potential sale of a stake in the company.