Digitally-enabled sales reach 52% of total; Avon synergies ahead of plan
Natura & Co and brands make donations of R$3 million to help victims of war in
Ukraine
SÃO PAULO, March 9, 2022
/PRNewswire/ -- Natura &Co's (NYSE – NTCO; B3 – NTCO3) net
income in the fourth quarter more than tripled and it reached
R$1 billion in the full year despite
short-term cost pressure, reversing a loss in the previous year.
The Group's strong focus on cost discipline allowed it to post an
EBITDA margin gain of 90 basis points in the fourth quarter of 2021
despite a slight sales decline in the period.
In this challenging operating environment, Natura &Co
continued in the quarter to make major advances on key strategic
initiatives that will fuel future growth. A key highlight is the
progress made on Avon's
turnaround, with the implementation of the new commercial model in
several key markets, both in Latin
America and at Avon International, with positive initial
signs, and an acceleration in digital tools. Planned synergies are
ahead of plan, with close to 50% of the overall target already
achieved at year-end, helping Natura &Co offset raw material
inflation and foreign currency headwinds.
In the face of the Ukraine and
Russia conflict, Natura &Co
has already made significant donations to relief organizations
acting on the ground in Ukraine,
mainly the Red Cross, and is also donating products to refugees.
Both markets are important for Avon, but represent less than 5% of total
revenue for the Group. While we are suspending operations in
Russia for The Body Shop and Aesop
via our Head Franchises, Avon is
also suspending exports while continuing to support the social
selling operations of its representatives via its local plant to
provide them with financial support. The Group will continue to
assess the very fluid and dramatic situation in the region.
Roberto Marques, Executive
Chairman and Group CEO, declared: "At a time when conflict is again
impacting millions of people, our thoughts are with our teams in
Ukraine and Russia, and with all those who find themselves
in harm's way.
The geopolitical situation adds new challenges to our
businesses, beyond headwinds in supply chain, rising inflation, new
pandemic restrictions and weak consumption in Brazil that has a strong effect on the CFT
market. However, our focus on costs and continued transformational
changes allowed us to significantly expand our EBITDA margin and
net income in the fourth quarter of 2021. In the full year, we
posted net sales growth and net income above R$ 1 billion, and ended the year with a strong
cash position of R$6 billion.
This performance reflects the remarkable mobilization of our
teams to focus on profitability, but also the strength of our
omnichannel model and the depth of the reinvention of the
social-selling model through digitally-enabled sales. At Natura
&Co Latam, the Natura brand outperformed the CFT market, with
strong growth in Hispanic markets in the fourth quarter that helped
offset a tough environment in Brazil. Avon International delivered strong
gains in EBITDA margin in Q4 as it accelerates the streamlining of
its operating model and benefitted from year-end seasonality. The
Body Shop demonstrated its ability to adapt through an enhanced
multi-channel offer and the brand's growing appeal. And Aesop
continues to post double-digit growth year-after-year,
outperforming global luxury brands.
As we expect to face continuing challenges especially in the
first half of 2022, we are focused on delivering our priorities,
implementing even stronger financial discipline to drive
sustainable profitable growth this year and beyond."
In the fourth quarter, Natura &Co's consolidated net revenue
was R$11.6 billion, down 3.0% vs the
same period last year in Brazilian Reais (-5.3% at constant
currency). Adjusted EBITDA margin stood at 13.3%, a gain of 90
basis points, reflecting financial discipline, structural changes
primarily at Avon International and the faster-than-expected
achievement of synergies, despite strong cost pressure. Net income
reached R$695.4 million, an increase
of 292.0% over the previous year's R$177.4
million.
In the full year, consolidated net revenue reached R$40.1 billion, up 8.8% in BRL and 3.8% at
constant currency, driven by growth in Hispanic markets and at
Avon. Digitally-enabled sales,
which include online sales (e-commerce + social selling) and
relationship selling using our main digital apps, reached 52% of
total revenue. Adjusted EBITDA margin was down 110 basis points
year-on-year to 10.3%. Net income was R$1
billion, reversing a net loss in the previous year of 650.2
million. The group ended the year with a strong cash position of
R$6 billion, and the group has
executed about 27% of its share repurchase plan through the end of
February 2022.
Performance by business unit:
Natura &Co Latam's net revenue decreased by 2.8% in BRL in
Q4 but was up 9.1% in the full year. In the quarter, Hispanic
markets accounted for more than half of net revenue for the first
time, at 52%. The Natura brand posted 3.5% growth in the quarter
and 10.5% in the year. In Q4, sales in Hispanic markets were up
22.4%, offsetting a 6.4% decrease in Brazil, which still outperformed a difficult
CFT market in the country. The Avon brand's revenue was down 12.3% in BRL in
Q4 but grew by 6.6% in the year, with solid growth in Hispanic
markets in the full year. Natura online sales reached 7.9% in Q4,
up from 4.3% pre-pandemic, and our own payment solution, &Co
Pay, already counted 340,000 accounts, with Total Payment Volume of
R$6.5 billion in the full year, far
ahead of the annualized estimate of R$4
billion. Adjusted EBITDA margin for Natura &Co Latam was
12.1% (-10 basis points) in Q4 and 11.2% (-70 basis points) in the
full year.
Avon International's net revenue decreased 5.6% in BRL in Q4 but
was up 2.5% in the full year. Overall representative
satisfaction showed positive momentum compared to the previous year
on the back of record service level rates and the implementation of
the new commercial model across Avon International's top 9 markets.
Social selling adoption reached 15%, three times above pre-pandemic
levels. The share of online sales, at 4.2% of the total, is also
triple that prior to the pandemic. Adjusted EBITDA margin was 10.7%
(+660 bps) in Q4 and 6.0% (+80 bps) in the full year.
The Body Shop's net revenue was down 8.8% in BRL in Q4 but was
up 9.2% in the full year. The Q4 performance was impacted by the
Omicron wave in the holiday season, notably in the UK. The Body
Shop had a strong Christmas campaign, with 12% growth over the
previous year. Online and At-Home channels are still 1.5
times above pre-pandemic levels despite channel rebalancing with
the reopening of stores. EBITDA margin was 22.2% (-150 bps) in Q4
and 17.6% (-260 bps) in the full year.
Aesop posted another excellent quarter, with net revenue
increasing 22.8% in BRL in Q4 and 33.4% in the full year. Aesop
continues to show strong momentum, posting revenue growth, notably
in Asia and North America. The share of online remains 1.5
times above pre pandemic levels at 24%. EBITDA margin was 26.7%
(-1,040 bps) in Q4 and 24.0% (-710bps) in the full year, reflecting
planned higher investments in digital, categories and geographic
expansion to accelerate growth.
About Natura &Co
Natura &Co is global purpose-driven group made up of four
iconic beauty companies, Avon,
Natura, The Body Shop and Aesop. Operating in more than 100
countries, with over 2,900 stores, 35,000 employees and over 7.6
million representatives and consultants, we believe in challenging
the status quo in order to promote positive economic, social and
environmental impact. Natura &Co posted net revenues of
R$40.2 billion in 2021. We believe in
the power of cooperation, co-creation and collaboration. We are
proud to be the world's largest B Corp. For 135 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.
Press Contact
Brunswick Group
+ 55 11 3076-7620
natura&co@brunswickgroup.com