Natura & Co mulls Avon separation amid widened losses
While the group said productivity at Avon improved year-on-year, this was ‘more than offset’ by reduced representative activity from fewer available reps
Natura and Co has confirmed it is still exploring a “potential separation” of Avon after its losses widened in the first quarter of trading. Over the period, its net loss widened by 43.3% to BRL934.9m (£143.6m), up from a loss of BRL652m (£100m) the prior year.
It comes as sales fell by 5.7% to BRL6.1bn (£937m), in part driven by its Avon International performance, where sales fell by 13.1% to BRL1.3bn (£214m), or by 4.7% on a constant currency basis.
While the group said productivity at Avon improved year-on-year, this was “more than offset” by reduced representative activity from fewer available reps, and a continuation of weaker promotional execution that was noted in its previous quarter.
Fábio Barbosa, group CEO of Natura and Co, said: “We are encouraged that the first quarter of the year showed positive results with a consolidated margin expansion of 110 bps vs previous year, driven by solid results from Natura and Co Latam, benefiting from the Natura and Avon integration in the region (Wave 2), coupled with richer country and brand mix. This more than offset the margin contraction at Avon International amid sales deleveraging.
“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. 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.”
He added: “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.”