Analysis: Natura’s recovery challenge grows with Advent on board

Natura’s weaker outlook signals tougher path for turnaround with Advent as new major shareholder Divulgação Natura’s recovery, after nearly four years of restructuring, will be more demanding than expected. The figures released by the beauty company on Wednesday (8) make clear that the turnaround will take time—and that places greater weight on Advent, which became a relevant shareholder with an 8% stake, in the group’s next phase. In a statement Wednesday morning, Natura said second-quarter revenue came under more pressure than initially expected because of a weaker consumer environment in Brazil and “internal operational challenges.” The cosmetics maker expects consolidated revenue of between R$5.1 billion and R$5.2 billion for the period, implying a year-on-year decline of 9% to 10%. The figures are preliminary and unaudited. Natura targets Latin America growth after operational overhaul Beauty group Boticário bets on efficiency to navigate slowdown The company said it faced product shortages amid adjustments to operating systems and the relocation of volumes from its recently closed Interlagos plant in the south side of São Paulo. Sector pressure The challenge is not Natura’s alone. A source close to Grupo Boticário told Valor that the Curitiba-based company is also seeing weaker demand in the sector. For Natura, however, the pressure is greater because it is going through a broad restructuring. The company has sold international assets, simplified its structure, and now wants to focus on Brazil and Latin America with the Natura and Avon brands. Advent, the U.S. private equity firm that has become a major shareholder, is arriving just as Natura has completed the first stage of its restructuring but still needs to stabilize operations before it can return to growth. That will be more difficult now, based on the company’s statement. Advent brings turnaround experience from investments in large companies such as Fleury and the owner of retailer Big. With last week’s transaction, in which it bought a 6.6% stake in Natura and will convert another 1.4% through derivatives, Advent enters the company with the right to nominate two board members. In March, Natura said Advent could end up with an 8% to 10% stake in the business. Harder path A significant Natura shareholder told Valor that the restructuring will be harder than the scenario outlined in March, when Advent signed the agreement to build a position in the company. Natura is one of Brazil’s largest beauty groups, with iconic brands, but it needs a management shake-up. The current leadership has repeatedly described its strategy as a return to basics—a mantra also adopted by other Brazilian companies—as it seeks to resume growth. For some of these companies, however, the path back has been more challenging because of the macroeconomic environment and issues specific to each business. The beauty group began its restructuring process in 2022. Since then, it has sold Aesop, The Body Shop, and Avon International, ending its international expansion cycle to focus on its core business. The market is now watching how Natura’s management will proceed with Advent as a partner.