Natura (NTCO3) denies disposing of The Body Shop after selling Aesop and boosting integration with Avon

The company told a conference call that its short-term focus is to seek business synergies in Latin America

Augusto Deniz

Apr 4, 2023 11:01 a.m

Following the announcement of the sale of Aesop to L’Oreal for US$2.525 billion, Natura (NTCO3) on Tuesday (4th) held a conference call to explain the company’s business and focus going forward. It’s planned to dump The Body Shop (TBS), at least for now.

According to Guilherme Castellan, the company’s CFO, the focus at TBS is to rejuvenate the brand and think about improving its position in Australia, Canada and the United Kingdom, which are the brand’s main markets.

“It’s a definite dynamic. Nothing thinking about selling hotspots or brands. Nothing’s on the table about that,” the CEO said, ruling out any business with The Body Shop. Castellane indicated that the time has come for fiscal discipline in the allocation of capital.

Debt reduction

“The proceeds from the (Aesop) sale will allow us to improve Natura’s capital structure, trim our balance sheet and unlock value for our shareholders. The proceeds will allow us to invest in priorities, which include the expansion and integration of the Natura and Avon brands in Latin America, as well as optimization and optimization of the Body Shop business,” he commented. Fabio Barbosa, CEO of Natura, on a conference call.

Our focus will be on reducing the total debt after the transaction closes (with L’Oreal). The main priority will be cost and free cash flow, which was a deficit last year. Our focus is to reduce this problem, taking into account the maturity of the business and the cost of debt,” added Guilherme Castellane.

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The CFO confirmed that the Natural-Avon integration is already happening. “We also work with Avon internationally, with key markets where there is real growth,” he said.

earnings

Speaking of dividends, the company reported that there is still something specific and it will depend on capital allocation, investments and debt restructuring. The L’Oréal deal will continue to close in the third quarter of 2023 [3T23]Castellan confirmed.

The CEO explained that the three brands (Natura, Avon and The Body Shop) are going through different moments in the short and medium term. “We have a big focus in the short term, and that focus will be on brand integration in Latin America. We will continue to improve Avon’s international presence, with a focus on emerging markets,” he explained.

According to the company, there are 10 countries to consolidate the business and there are no expectations of expanding into new countries in the medium term.

The Body Shop reformulation follows

He also said that the company will continue to invest in the transformation of TBS, which will include optimization in certain geographies and fixed assets.

Guilherme Castellan stressed that we “orient the business to adapt to the challenging environment”. At The Body Shop, he says, “the management team is focused on stabilizing the front lines of the core business and implementing cost savings.”

About Avon, the company has made it clear that it intends to focus on the cosmetics segment, where margins are better and the brand is strong.