Natura Brasil posted a dip in earnings for its second fiscal quarter.
The company posted earnings before interest, taxes, depreciation and amortization of 298.6 million Brazilian reals, or $72.3 million, down 13.4 percent year-over-year. Net revenue was 2 billion reals, flat from the prior-year period.
For the first half of the year, Natura’s EBITDA was 663.2 million reals, up 18 percent year-over-year. Net revenues for the first half were also up, to 3.75 billion reals, up from 3.72 billion reals in the prior-year period. Natura said its results were affected by weak consumer spending in Brazil, fewer business days in April, and an adjustment to its commercial calendar. The company’s pending acquisition of The Body Shop also affected financial results.
The company launched a relationship sales model in May, which Natura said had good initial results.
Meanwhile, Aesop posted strong gains — 30.6 percent in Australian dollars — driven by same-store sales growth and the opening of 33 stores. EBITDA declined for the brand in the quarter by 18.1 percent because of a newly implemented incentive plan for the company’s executives.
Back in June, Natura announced it was in exclusive negotiations to buy The Body Shop from L’Oréal. The deal still requires regulatory approval, which Natura said it expects in the coming months.
Natura’s deal for The Body Shop adds another natural-focused line to Natura’s portfolio, which includes Aesop and Natura Brasil. It also diversifies Natura’s geographic footprint — after the deal closes, 50 percent of Natura’s sales are expected to come from outside of Brazil, the company has said.
The Body Shop has more than 3,000 points of sale in 60 countries. About 25 percent of the company’s markets are said to require turnarounds. The business posted net sales of 921 million euros, or $1.02 billion, for 2016. Natura is taking on debt for the deal, but plans to be back at a ratio of 1.3 times debt to earnings before interest, taxes, depreciation and amortization in four years. The business is also expecting all three better-for-you personal-care businesses to have a significant amount of synergies.