Consolidated gross profit during the quarter reached $1.01 billion, posting a gross margin improvement year-over-year in all business units. Consolidated adjusted EBITDA was $154 million with a margin of 10%.  

The company ended the quarter with net cash of $143 million. 

“Avon International posted broadly stable top line and further margin improvements, reaching high-single-digit adjusted EBITDA margin,” said Fábio Barbosa, Group CEO of Natura &Co. “The proceeds from the sale of Aesop, closed in late August, enabled us to quickly advance in our liability management plan, with more than half of our debt already prepaid by the end of the quarter. This is an important step to unlock sustainable value for our investors and deliver on our financial priorities of maintaining a strong capital structure, strict financial discipline on costs and expenses, and boosting cash conversion. On the latter, we reached a neutral cash generation this quarter despite the normal seasonal cash consumption to build up inventories for the holiday season. Furthermore, marking the third year of our sustainability vision, after having made substantial progress towards our goals set in 2020, our approach has evolved. We have realigned our metrics, and targets to address the pressing concerns of our time. We have been a partner of the Union for Ethical Biotrade (UEBT) for over fifteen years and together we will work towards Natura &Co’s adoption of regenerative practices to deliver even more positive impact. Finally, we recently announced updates related to The Body Shop sale process and we will keep the market informed of any relevant news. This is another important step to continue to streamline our business, a journey started in the second half of 2022. We are confident that our enhanced capital structure, combined with a laser-focus strategy on our key priorities, will allow us to unlock significant value for our shareholders in the future through both topline growth and margin expansion.”   

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This collaboration is part of the brand’s efforts to move toward becoming “a truly omnichannel beauty company.” 

“This is the perfect moment in the UK for a strategic alliance between Avon and Superdrug,” said Angela Cretu, Avon CEO. “At Avon, we’re all about bringing aspirational beauty at irresistible value to consumers however they want to shop with us, whether that’s with high-touch service from one of our beauty advisers or with high street convenience at Superdrug. We see this partnership as our next move to expand our reach with best-selling, award-winning products that enable women [to] feel good without breaking the bank.” 

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“Under the stewardship of Natura &Co, Aesop reached new heights, expanding the brand’s presence across the globe,” said Fabio Barbosa, Natura &Co Chief Executive Officer. “In its constant striving for excellence, it also enhanced its sustainability practices. We feel immense gratitude and deep respect for its management and teams and will always hold the company close to our hearts. We wish Aesop all the best for the next chapter as part of the L’Oréal Groupe.” 

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The company saw a net loss of $146 million with a consolidated adjusted EBITDA of $151 million. Continued challenges with The Body Shop, which saw a 12.5% decline in net revenue, as well as an expected drop in Avon’s Home & Style category in Latam offset progress. 

“Natura & Co’s second-quarter performance continued to show the improvement already observed in Q1, with low-single digit top line growth at constant currency and a significant improvement in adjusted EBITDA margin,” said Fábio Barbosa, Natura &Co Group CEO. “This was mainly driven by gross margin, benefiting from mix effects, partially offset by investments and inflation. We look forward to delivering our strategy, continuing to position Natura &Co on the course towards strong profitability and low leverage, allowing us to pursue meaningful and sustainable growth in the future.” 

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“Our products are leaders in the makeup and skincare sectors in a highly competitive market. With the creation of these new teams, we will be able to offer products that are even better suited to the needs of the Latin American market. The change will also promote the exchange of experiences between the specialized teams of Avon and Natura, improving processes so that they remain dynamic and expanding the creative and innovative potential while maintaining the distinctive identity of each of the brands,” stated Louise Scott, Avon’s Head of R&D and Sustainability.

All global development of fragrances and personal care products will be conducted at the new Latin America Innovation Center, combining Avon’s 100+ years of knowledge in cosmetics development with industry experience. 

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The Bravo Global Good Award award honors companies that take a proactive approach to environmental, philanthropic and social responsibility issues. In this, its second year of existence, the DSN Awards Panel chose to recognize the incredible work being done by Natura &Co.

Natura &Co is a group of four purpose-driven businesses, Avon, Natura, The Body Shop and Aesop, that believes that business can—and should—be a force for good. That’s why in June 2020, they launched their Commitment to Life Sustainability Vision to do their part in tackling some of the world’s most urgent and challenging issues including:

• Addressing the climate crisis and protecting the Amazon;
• Defending human rights and being what they call “human kind;” and
• Embracing circularity and regeneration.

They strive to always balance profit with people and the planet. They also believe that what gets measured gets done, so these ambitious goals are diligently measured against 31 metrics and targets to ensure Natura &Co is a company that always gives back to the world more than it takes.

We recently sat down with Ana Costa, Vice President of Legal and Government Affairs for Natura &Co Latin America to get her thoughts on how their commitment to be a force for good in the world is helping their business and the planet in equally impactful ways.

Creating Opportunity for Everyone

One integral part in Natura &Co’s overarching mission to make the world a better place through its Commitment to Life is to defend human rights and be “human kind” by creating stringent metrics surrounding inclusion and diversity.

“We believe that a truly inclusive workforce focuses on all aspects of culture, including gender, but also beyond it,” explained Costa. “And with diversity comes greater innovation and creativity; a breadth of skills and perspectives; and higher employee morale. These are benefits that every business should welcome.”

When it comes to women in leadership, Natura &Co’s aim was to go beyond the UN SDG goal of 30 percent of women in leadership, increasing their goal to 50 percent by 2023. They hit that mark two years early in 2021, reaching a 50.4 percent balance.

But Natura &Co plans to go even farther. As Costa shared, “We have also committed to delivering a living wage for our people in more than 100 countries by 2023 and are working towards 30 percent inclusion of underrepresented groups across our management levels. This includes six factors: ethnicity, the socioeconomically disadvantaged, sexual diversity, gender identity and physical or mental disability.

Protecting the Environment

Natura &Co. recognizes the importance of protecting the planet and doing its part to maintain the highest standards of sustainability, integrity and transparency. That is why the company made a bold commitment to become Net Zero across their entire value chain.

To do this, they have pledged to set science-based targets across Scopes 1, 2 and 3 by 2022. These goals—both short and long-term—are in line with the Science Based Targets Initiative. “We’ve been working with the Carbon Trust to consolidate our organizational footprints,” Costa explained. “Throughout 2021, our first step to address our ambition to become Net Zero was to create a task force consisting of people from the group and the brands to calculate our GHG (greenhouse gas) inventory and create a GHG inventory baseline for Natura &Co.”

Additionally, Natura &Co is the world’s largest B Corp which means they are certified as a company that meets the highest standards of social and environmental performance, transparency and legal accountability to balance profit and purpose.

“Being a B Corp means striving for continuous improvement, which is what we all will need to do to create a fairer, more sustainable world. We will never stop reaching higher and going further to generate positive impact,” Costa said.

Making a Difference

Natura &Co’s commitment to being a positive force in the world—both for the environment and for human rights—is impressive and makes them a deserving recipient of the Bravo Global Good Award. Costa accepted the award on behalf of the company via video during the DSN Global Celebration.

“Our channel has proven to be more resilient and relevant than ever before, showing that direct selling can make a great contribution and difference to our society,” she said. “Receiving the Global Good Award is proof that Natura &Co is on a good path. We’d like to express our sincere gratitude and honor at receiving this award. Thank you!”

From the June 2022 issue of Direct Selling News magazine.

The post Natura &Co / Creating Real and Lasting Change first appeared on Direct Selling News.

“We spent the past few months talking to our shareholders and potential investors, and the conclusion is pretty clear: the U.S. listing makes sense strategically, but maybe timing isn’t right,” said Chief Executive Officer Roberto Marques. “We’ll assess the appropriate moment to resume it.” 

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Net revenue for the fourth quarter of 2021 was R$11.6 billion, a three percent decrease from the same period last year. Adjusted EBITDA margin was 13.3%, a result that reflects the structural changes and achieved cost synergies at Avon International. 

Driven by a growth in the company’s Hispanic markets, consolidated net revenue in 2021 reached R$40.1 billion. Online sales, e-commerce, social selling and digital app sales accounted for 52% of total revenue.  

The Body Shop and Aesop posted positive net revenue increases of 8.8% and 22.8% increases respectively. Avon International reported a net revenue decrease of 5.6% in the fourth quarter of 2021, but a 2.5% increase for the full year 2021. 

While both Ukraine and Russia are important markets for the group, the regions represent less than 5% of the organization’s total revenue. Natura &Co announced it has suspended operations in Russia for both The Body Shop and Aesop, and is suspending exports for Avon while it continues to support social selling operations for its representatives. In addition to the global complexities of inflation, supply chain limitations and pandemic restrictions, this international crisis has made the group’s emphasis on costs and continued transformational changes even more important. This cost focus allowed the company to significantly expand its EBITDA margin. 

The group ended the year with a strong balance sheet, with R$6 billion in cash or cash equivalents. 

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Building Bigger Brands

The direct selling model is becoming more deeply ingrained within larger retail brands, especially in the beauty and cosmetics segments. This trend goes beyond online direct-to-consumer sales done by a retail company. It involves either the development of a supplemental direct/social selling brand within the parent company or the acquisition of a direct/social selling brand into a larger conglomerate. 

The benefits are clear and go both ways. Direct selling has robust IT and social selling platforms that the parent company can leverage as well as presence in new markets. And the established retail brand lends credibility and exposure to the direct selling enterprise. 

Although this trend isn’t new, it is growing and shaping the scope and focus of the industry. Traditional retail brands are acquiring or merging with direct selling standouts to create even bigger international beauty brands. And these brands dominate across all categories: Direct to consumer, retail, e-commerce and social selling. 

There are several very well-known companies and celebrities launching social selling initiatives this year, each with the potential to change and shape the future of this channel. One recently announced example is Kendra Scott, a multichannel retail jewelry and accessories brand starting a direct/social selling division. This 20-year old brand was founded in 2002 and boasts $360 Million in annual sales. Its entry into the social selling space, Direct Retail by Kendra Scott, shows tremendous potential. 

Natura, the number two direct selling company in the world, is a prime example of a brand already excelling across all channels. They acquired Avon Products in January 2020 for $3.7 Billion, creating the world’s fourth largest beauty company. The Avon Products acquisition did not include “The Avon Company,” which is owned by South Korean-based LG Household & Healthcare since 2019 and operates in North America. 

Natura is also the parent company of The Body Shop, which operates around 2,800 retail locations in over 70 countries providing sustainably produced skincare, body care, hair care and makeup. The Body Shop at Home is their social-selling channel, where consultant satisfaction is an astounding 92 percent and the business has flourished over the last two years including a very successful reintroduction of the model to the U.S. market. Natura also owns Aésop, a luxury skincare brand based in Australia. The brands’ messages are all cause-based and the combination with Avon created a $7 Billion company in 2021.

Another great company showing how channel diversification can strengthen a brand is Beautycounter. 2021 was a landmark year for the clean beauty brand, now valued at $1 Billion after its acquisition by Carlyle. The company has leveraged a wildly successful omnichannel model. Their products can be purchased in a variety of ways: Through one of 65,000 consultants; directly on their website via shoppable live-streams; and traditional retail options through seasonal pop-ups in Sephora and brick-and-mortar locations in markets like Los Angeles, Denver and New York. 

Groupe Rocher, a French-based international cosmetic and beauty brand, greatly expanded its portfolio into direct selling when it acquired Arbonne in 2018. The family-owned company owns and operates retail locations throughout France but had little direct selling presence prior to acquiring Arbonne. 

The brands share similar values and botanically-based products. Group Rocher understands the value of the direct selling model, and the addition of Arbonne allowed them to become a $3 Billion company. 

L’OCCITANE en Provence is another huge beauty brand making an impression in the direct selling/social selling space. They acquired direct-selling standout LimeLife by Alcone in 2017. What started out as an informal referral system at LimeLife by Alcone evolved into a full-fledged business opportunity. The brand has been providing professional makeup artists with their products since 1952 and found social selling to be a natural way to extend the brand with these influential professionals. In fact, the brand joined the DSN Global 100 list in 2020.

The emphasis on social selling continued in 2020 with L’OCCITANE’S U.K. launch of DUOLAB, a social selling-based skincare startup engineered to strengthen its ecommerce sales and expand its digital brand.  

In June of 2021, L’OCCITANE en Provence announced plans for the company to expand its omnichannel beauty and lifestyle presence through the direct selling model once again. The expansion was part of the company’s North American business transformation and is designed to help the company develop a more personal relationship with its customers. The result is MyL’OCCITANE, a brand-new social selling platform. 

Across All Categories

The trend goes beyond beauty brands and is reflected in other direct selling categories as well. LegalShield has grown considerably the last few years. Serving 4.5 million individuals and 140,000 businesses, LegalShield is the world’s largest platform for legal, identity and reputation management services across North America.

They have three channels including a digital direct-to-consumer option; business-to-business group or corporate sales as well as a vibrant direct selling model. Legal Shield is celebrating its golden 50^th anniversary this year. Congratulations to Jeff Bell and the entire Legal Shield team! 

In December 2021, health supplement standout Prüvit merged its Exogenous ketones business with direct-to-consumer ready-to-eat healthy meal and snack delivery company Sunbasket to supplement and complement the brand’s healthy lifestyle offering. It’s the kind of brand extension that not only makes sense for the company but also adds tremendous value for the customers and distributors who can now easily order and enjoy the keto-friendly meals and snacks that enhance the Prüvit lifestyle.

Additionally, Total Life Changes just introduced a Product Influencer Program that’s very reminiscent of affiliate marketing. It allows customers that enjoy and believe in the products but don’t want to become distributors in the traditional sense to use their influence to encourage others to buy the products via social media, earning $20 for every product purchase. Best of all, Product Influencers get paid the next day after a qualifying sale. 

Other direct sellers are introducing similar programs and encouraging existing distributors to use this exciting social selling system as well. This affordable impulse purchase via a social media selling system has really developed over the last five years. Other amazing success stories include Younique’s lash product; Nu Skin’s toothpaste; Colorstreet’s nail products; Paparazzi jewelry; and Senegence Lipsense. These social media “selling systems” and others like them have successfully acquired tens of millions of customers in direct/social selling.

I hope you and your teams continue to benefit from the research, journalism, advocacy and education Direct Selling News brings to you via our publication, events, website, podcasts and more. 

Stuart Johnson has served the direct selling industry for 36 years and is the sole Founder and CEO of Direct Selling News. His passion for the channel encompasses a broader commitment to build and connect the direct selling community through exclusive industry events such as Direct Selling University and the DSN Global Celebration.  

Stuart is arguably the most connected person in direct selling, building and growing a network of executives, thought leaders, strategists and innovators. His advice and counsel are sought after by leaders throughout the channel. 

The post Omnichannel Direct-to-Consumer Updates first appeared on Direct Selling News.

“The climate crisis really is the defining challenge of our time–the private sector and public institutions as well as citizens across the world need to work together to step up and push for change,” said Marcelo Behar, Vice President of Sustainability & Group Affairs for Natura &Co. “There’s one obvious and simple key to arresting climate change: arrest the destruction of tropical forests like the Amazon.” 

This exhibit showcases the work of Sebastiao Salgado, a photographer from Brazil, who has spent years documenting the Amazon Forest and the immense changes the region has undergone. In 200 black and white images, some never-before-seen in the UK, viewers are introduced to 12 different indigenous communities and given a glimpse into a world that is quickly vanishing.  

“As a Brazilian company, Natura &Co holds the Amazon very close to our hearts and we have long been committed to protecting the rainforest with its wealth of biodiversity and traditional communities,” Behar said. “We are pleased to partner with the Science Museum and support the Salgado ‘Amazônia’ exhibition to demonstrate the beauty of the Amazon whilst helping to raise awareness of the effects of climate change in the region and the crucial need to take action before deforestation reaches a tipping point. It will take a global effort to save the Amazon and we at Natura are determined to play our part.” 

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