#Brazil #São Paulo #Natura #Hispanic Markets

Natura's Quarterly Performance Under Scrutiny

On August 10, 2026, Natura announced its financial results for the second quarter of 2026, revealing a revenue total of BRL 5.2 billion. This figure indicates significant operational challenges, particularly in Brazil, where factors such as product availability issues, temporary tax discrepancies, and a weakening consumption environment have posed considerable obstacles.

Contrastingly, the company's performance in Hispanic markets has been much more favorable. It reported an impressive growth rate of +7.2% in constant currency, driven primarily by strong advancement in Mexico and a steady recovery in Argentina. Notably, revenue from the Natura brand increased by 12.3%, while Avon experienced a 4.7% growth in this region. Such results are attributed to greater efficiencies stemming from the company's newly implemented operating model.

Despite the difficulties faced in Brazil, Natura managed to report a consolidated EBITDA of BRL 620 million, achieving a margin of 12.0%. Excluding the effects of the temporary tax issue, the margin increased to 13.2%, representing an improvement of 470 basis points in comparison to the previous quarter.

Positive Cash Flow amidst Operational Challenges

The company reported a positive free cash flow of BRL 342 million and achieved a slight reduction in its leverage ratio to 2.06x. These figures signal a robust financial health for Natura, showcasing its resilience in navigating through the operational hurdles.

Natura has acknowledged that its revenue in Brazil has been impacted by various internal adjustments during the quarter. To address these challenges, the company has begun implementing several strategic initiatives, including:

• - Rebalancing the supply chain for improved efficiency throughout the remainder of 2026.
• - Incentives aimed at their sales force and an emphasis on high-turnover product categories.
• - Accelerating the pace of store openings alongside a newly structured franchise agreement model.
• - Expanding the digital store initiative, "Minha Loja," for beauty consultants, alongside entering new marketplaces.

According to João Paulo Ferreira, CEO of Natura, the operational difficulties faced this quarter were necessary adjustments intended to ensure future growth. Investments in digital capabilities, logistics, and the alignment of direct sales, online platforms, and franchise channels were emphasized as crucial for recovery. Ferreira notes that although product shortages exceeded initial projections, the core business strategy remains intact.

Strategic Investments and Growth Outlook

Natura remains committed to its strategic investments in marketing, research, development, and digital innovation. While the company holds a positive outlook for margin expansion relative to previous years, adjustments to their expected margins for 2026 have been made. The ambition to surpass last year's free cash flow remains, with a commitment to maintaining leverage within optimal ranges.

The CEO emphasized, "This performance represents a temporary setback in our return to full growth. We have established a solid business model based on strong brand identities, a unique distribution approach in high-potential markets, and a dedicated, innovative team focused on execution."

In line with its dedication to sustainability and transparency, Natura also unveiled its 2025 Integrated Report and ESG Indicators Booklet during the quarter. These publications highlight their early achievements towards the 2030 Commitment to Life goals. For example, Natura has expanded to 52 bioingredients sourced from Amazonian socio-biodiversity, partnering with 46 agroextractive communities, surpassing their initial targets.

The impact of sustainability initiatives has been notably positive, with Natura showcasing the financial value generated through various programs such as their special reverse logistics initiative, which produced significant gross revenue and increased sales across store formats. This initiative both supports the company's goals for circular economy models and demonstrates sustainable business practices that resonate with a growing environmentally conscious consumer base.

Conclusion

Founded in 1969, Natura stands as a leading Brazilian multinational in the beauty and personal care arena across Latin America. With a commitment to ethical principles and sustainable practices, the company remains prepared to tackle the challenges ahead. For further insights about the company, its products, and sustainability initiatives, visit www.natura.com.br, and follow Natura on social media platforms such as LinkedIn, Facebook, and Instagram.