By Brazil Stock Guide – Natura Cosméticos SA (B3: NATU3) said second-quarter revenue likely fell as much as 10% from a year earlier, after weak consumer demand in Brazil was compounded by product shortages, systems changes and disruptions tied to the company’s operating overhaul.
The Brazilian cosmetics group expects consolidated net revenue of between R$5.1 billion and R$5.2 billion in the second quarter, implying a year-on-year decline of 9% to 10%, according to preliminary unaudited figures released Wednesday. The company said the pressure in Brazil was stronger than initially expected and more than offset positive constant-currency growth across all countries in Hispanic Latin America.
The warning puts the spotlight back on Natura’s execution risk in Brazil, its core market, just months after the company framed 2026 as a year of revenue recovery and margin discipline following a broader corporate simplification.
Natura said second-quarter sales were hurt by severe product unavailability during the stabilization of a new integrated planning system, an SAP update and the reallocation of production volumes after the closure of its Interlagos plant. The shortage hit the relationship-selling channel, leading to a year-on-year decline in consultant activity and productivity that was not fully offset by a sequential recovery in the channel.
The company also pointed to a short-term slowdown in online sales after implementing new pricing policies and commercial rules across channels, a move it said is necessary to support future growth in direct-to-consumer sales. Franchise sales were also affected as all franchise contracts migrated to a new model based on sell-out performance, prompting temporary destocking at stores and lower sell-in volumes.
There was one mitigating factor: profitability. Natura said reported EBITDA margin is expected to expand from the previous quarter, helped by lower sequential severance expenses and efficiency gains from its new operating model. The improvement should partially offset the negative impact from operating deleverage, though the company did not provide a preliminary EBITDA figure.
The update creates a mixed setup for investors. The top-line miss suggests Natura is still struggling to stabilize the Brazilian engine, especially in relationship selling, while the expected sequential margin improvement indicates that cost discipline and the new operating model are beginning to show through. The key question is whether the second-quarter weakness is mostly a transitory execution problem or a sign that Brazil’s recovery will take longer than management had hoped.
Management said it is working on supply-chain reconfigurations involving production assets, suppliers, material flows and systems, with potential short-term benefits. It also cited changes to sales-force incentives, more regionalized communication, a focus on high-turnover categories, expansion into new marketplaces and acceleration of consultants’ digital stores under the “Minha Loja” platform. Natura also said it plans to resume a faster pace of store openings, with new franchises already operating under the revised contract model.
The disclosure is preliminary and subject to review as part of the company’s regular accounting closing process. Natura is scheduled to release full second-quarter results on Aug. 10 and will enter its quiet period on July 12.
Leave a Reply