By Andre Romani
SAO PAULO (Reuters) – Cosmetics maker Natura&Co expects pressure on profit margins at units such as Avon International and The Body Shop to continue amid currency impacts, commodities, energy tariffs and personnel expenses, a director said. of the company this Thursday.
Natura&Co, which operates the Natura, Avon International, Aesop and The Body Shop brands, reported a net loss of 560 million reais the day before, the third quarterly loss in a row, pressured by costs and the effects of inflation. The company even discontinued performance forecasts as it deepens restructuring efforts.
The company’s shares fell about 4% this Thursday, while the Ibovespa retreated 2.6%.
Guilherme Strano Castellan, Chief Financial and Investor Relations Officer, pointed out that the company’s profit margin dynamics were different between its units, with Aesop not seeing pressure and Avon International being one of the hardest hit.
“We expect gross margin to remain under pressure ahead,” he said of Avon’s margins, noting that the main impact came from currency. Avon’s gross margin dropped from 61.3% to 59.6% in one year, while that of the Natura&Co group fell to 64.1%, from 65.3% in the third quarter of 2021.
Castellan said The Body Shop is also likely to “continue to see pressure on margins in the short term”, even if it possibly manages to make more pass-through of inflation. The unit’s gross margin, a British cosmetics and perfume brand, dropped 1.4 percentage points to 76.3%.
Natura&Co has been suffering from the impacts of the war in Ukraine, especially in its operations in Europe, and the global levels of interest and inflation, which reduce demand.
At the same time, the company began a restructuring process that includes reviewing its geographic presence, integrating operations in Latin America and studying a potential spin-off or initial public offering (IPO) in the United States of the Australian brand Aesop.
Fábio Barbosa, president of the company since June, said that in addition to reviewing the presence of its units in each country, Natura&Co also evaluates the format in which it will operate in the regions.
In the earnings release, Natura&Co said that Avon International left Albania and started strategic partnerships in India, Saudi Arabia and Kyrgyzstan.
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