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Strong revenue growth at Natura &Co in Q3 driven by all three brands

Natura &Co posted another strong performance in the third quarter of 2019, with revenue growth in all three of its brands, Natura, The Body Shop and Aesop.

The group has also taken major steps towards closing the transformational acquisition of Avon Products, Inc., with new milestones reached: Only a few days after CADE, Brazil’s anti-trust authority, approved the acquisition without restrictions, Natura and Avon’s shareholders today both voted in favour of the transaction at extraordinary shareholders’ assemblies. The group therefore remains on track to close the acquisition as planned in the first quarter of 2020, creating the world’s fourth-largest pure play beauty group and a leader in Direct-to-Consumer. 

Natura &Co’s consolidated net revenue reached R$3.5 billion, up 7.2% on a reported basis and up 10.1% at constant currency. Adjusted EBITDA was R$459.3 million and net income was R$68.6 million in Q3, reflecting a planned increase in investments at Natura in digitalization and the brand and non-recurring costs related to the Avon acquisition. In the nine months, net income rose by a healthy 6% to R$176.6 million.

"Natura &Co posted a remarkable sales performance in the third quarter, exceeding market expectations, with double-digit growth in constant currency. All our businesses and brands again contributed to growth despite a market that remains challenging in Brazil, where Natura continued to grow market share, and Hong Kong, which impacted The Body Shop and Aesop,” said Roberto Marques, Executive Chairman of Natura &Co.

The Natura brand’s adjusted net revenue in Brazil was up 8.1% in Q3, supported by innovative product launches. Productivity per consultant rose for the 12th consecutive quarter. Natura’s digital platform now has 860,000 users in Brazil and online sales grew in double-digits. Latam also saw growth of 10.2% in adjusted net revenue in Brazilian Reais and a stronger 28.8% in constant currency. Argentina posted a strong performance despite a challenging market environment, and Mexico and Colombia also delivered growth.

The Body Shop continues to make headway in its transformation plan. Net revenue was up 1.1% in Reais and 3.8% in constant currency in Q3. Excluding events in Hong Kong, constant-currency growth would have reached 6.4% Like-for-like own-store sales grew 3.1% in the UK, underscoring the brand’s attractiveness in its biggest market. Adjusted EBITDA of R$69 million, with margin of 7.4%, reflected the impact of events in Hong Kong. Excluding that impact, adjusted EBITDA margin was up 30 basis points to 8.0%.

Aesop delivered yet another quarter of solid growth. Revenue increased 10.8% in Reais and 10.2% at constant currency. Like-for-like retail sales growth was 9% in the quarter, and Aesop opened four new signature stores in the period, bringing the total to 240. Margin EBITDA was 12%, up 300 basis points.

Natura &Co’s net-debt-to-EBITDA ratio stood at 2.98 times in Q3, decreasing from 3.27x in Q3-18. The group is on track to achieve its target of reducing the company’s leverage to the pre-The Body Shop acquisition level of 1.4 times by 2021.

© 2019 - Brazil Beauty News - www.brazilbeautynews.com

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