Natura &Co continues mulling possible Avon separation as revenue dips

Brazilian beauty group Natura &Co has confirmed that it is mulling a possible separation with its subsidiary, Avon International, which saw its revenue slip in the first quarter of 2024.

In a statement included in the group’s financial report, Fábio Barbosa, group CEO of Natura &Co, said: “Avon International had another challenging quarter with top-line down, impacted by a steep Fashion and Home decline and a softer impact of CFT [cosmetics, fragrance and toiletry, ed.] categories.

“The management team is working on simplifying the market, focusing on key countries, and enhancing our portfolio with superior promotional execution. We believe these steps are crucial to stabilise revenues and keep us on track to improve profitability.

“We are 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.”

Avon International saw revenues drop by 4.7 percent YoY, with beauty down 4.2 percent and a steeper decline seen for Home & Style. The company cited reduced representative activity from fewer available reps as the cause, as well as the continuation of weaker promotional execution.

This contrasted the results from the company's core business, Natura &Co Latam, where revenues were up 3.1 percent for the period, led by a “solid” performance from Natura Brazil, which was up 11.3 percent. This, however, had also seen impact from the Avon brand, with its Brazilian label seeing revenue drop 11.3 percent.

Natura &Co’s net revenue overall came to BRL 6.1 billion, rising 1.1 percent compared to the same period last year.

The shift comes as Natura &Co continues to roll out the second phase – dubbed by the company as ‘Wave 2’ – in its transformational process, through which it has already reported “significant margin expansion” in Peru and Colombia.

Barbosa added: “The ongoing roll-out of Wave 2 is a pivotal step in our transformational process, and 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, resulting in gross margin improvement in all countries where Wave 2 was implemented.”