#Brazil #São Paulo #Avon #Latin America #Natura

Natura's Revenue Performance in Q1 2026

In the first quarter of 2026, Natura, a leading beauty and personal care brand, shared its latest financial results. With net revenues reaching R$ 4.7 billion and an EBITDA of R$ 346 million, the company is navigating through turbulent macroeconomic conditions, particularly affecting its operations in Brazil and Argentina. Despite these challenges, Natura demonstrated growth in various aspects of its business, particularly in other Latin American markets.

Revenue Pressures in Key Markets

The macroeconomic environment in Brazil and Argentina has posed significant hurdles for Natura, impacting consumer purchasing habits and consultant activities. Brazil, being the largest market for Natura, saw its performance suffer from decreased sales activity and lower consultant headcounts. The situation in Argentina remains precarious, although there are signs of recovery following the integration with Avon, which occurred in the latter half of 2025. The integration aimed to consolidate operations and streamline offerings but has also been influenced by the country's volatile economy and unfavorable exchange rates.

Positive Growth Indicators

Despite these struggles, there were some noticeable bright spots. Natura gained market share in Brazil during the quarter, largely driven by an uptick in sell-out growth—essentially sales directly to consumers. The company also reported a sequential increase in its relationship selling channel, which indicates a recovery in its consultant network. Particularly noteworthy was a significant year-over-year increase in digital sales, which surged by 23.6%. This positive trend can be attributed to enhanced platform traffic and digital marketing innovations, such as live commerce, which resonated well with consumers.

In addition to Brazil, other Hispanic markets outside Argentina showed solid performance during Q1 2026. Countries like Mexico, which completed its Avon integration earlier, saw a robust recovery and contributed positively to Natura's growth in the region.

The Avon Relaunch

March 2026 marked the initiation of the Avon relaunch in both Brazil and Mexico. This strategic move features a revamped product lineup aimed at capturing consumer interest and driving sales. Although it is still in the nascent stages, the early feedback is promising, with new product sales surpassing expectations, enhancing overall brand health metrics since the relaunch commenced.

Financial Health and Future Outlook

Natura's profitability took a hit due to the revenue slowdown compounded by extraordinary non-operating expenses associated with adjusting to the company's new operational model. The operating model is designed to create a leaner structure, improving agility and efficiency. Notably, Q1 experienced approximately R$ 330 million in associated costs. However, the overall cash flow remained neutral when excluding these extraordinary costs, demonstrating the resilience of the business.

CEO João Paulo Ferreira emphasized a strong commitment to sustainable revenue growth and expanding profitability. He expressed optimism for 2026, focusing on enhancing annual margins compared to 2025 while ensuring effective capital allocation to deliver returns to shareholders.

Commitment to Ethical Practices

Social and environmental responsibility remains a cornerstone of Natura's business philosophy. The company was recognized by the Ethisphere Institute as one of the World's Most Ethical Companies for the 15th consecutive year. Furthermore, it climbed to the second position in B3's Corporate Sustainability Index, reflecting its dedication to integrating social and environmental impacts with value creation.

Conclusion

Founded in 1969, Natura has established itself as a pioneer in the Latin American beauty sector, blending profit with positive socio-environmental impacts. The company engages with millions of consultants and utilizes e-commerce platforms to reach consumers effectively. As it navigates the complexities of the current economic landscape, Natura's strategic maneuvers and commitment to ethical practices position it for potential growth and improved performance in the coming quarters.