# Natura Swings to Profit as Brazil Sales Fall 9%

*Cosmetics maker posts R$49 million in third-quarter earnings despite lower revenue, persistent supply shortages and weaker consultant activity*

- Published: 2026-11-12
- Section: Insights
- URL: https://brazilstockguide.com/insights/natura-swings-to-profit-as-brazil-sales-fall-9/

![Natura Q1 loss](https://i0.wp.com/brazilstockguide.com/wp-content/uploads/2025/09/loja-natura-sede-sp.webp?fit=900%2C600&ssl=1)

*Natura Loss Widens as Margins Come Under Pressure  (Image/Natura)*

**By Brazil Stock Guide —** Natura Cosméticos SA (B3: NATU3) reported a net profit of R$49 million in the third quarter of 2026, reversing a R$1.926 billion loss a year earlier, even as operational challenges in Brazil continued to weigh on sales. Consolidated net revenue fell 3% year over year to R$5.038 billion, reflecting product shortages, declining consultant activity and weaker demand in the company’s largest market.

The return to profitability partly reflected a change in the comparison base. Natura’s third-quarter 2025 loss included R$1.807 billion in charges related to discontinued operations. Excluding those items, the company had posted a R$119 million loss from continuing operations, meaning its year-over-year earnings improvement on a comparable basis was R$168 million.

The improvement was largely driven by lower net financial expenses, which declined to R$267 million from R$431 million a year earlier. The company benefited from a favorable comparison with 2025, when appreciation of R$ against US$ triggered significant mark-to-market losses on currency hedges.

Earnings before interest and taxes, or EBIT, remained broadly stable at R$230 million despite weaker sales. General and administrative expenses dropped 19.7%, helping offset the impact of declining revenue.

Consolidated earnings before interest, taxes, depreciation and amortization, or EBITDA, totaled R$460 million, down 0.9% from R$465 million a year earlier. The EBITDA margin edged up to 9.1% from 8.9%.

#### Brazil Sales Decline as Supply Problems Persist

Brazil remained Natura’s main operational challenge during the quarter, with net revenue falling 9% to R$2.920 billion from R$3.210 billion a year earlier.

Although the decline was less severe than the 14.8% contraction recorded in the second quarter, performance remained below the company’s internal expectations.

Sales of Natura-branded products in Brazil decreased 9%, while Avon revenue contracted 14.8%. Both brands were affected by persistent product shortages, lower sales volumes and declining productivity among beauty consultants.

The average number of active consultants in Brazil fell 2.5% year over year to 1.477 million from 1.514 million. The company said its consultant network has been shrinking since early 2025, while initiatives designed to rebuild the sales force have yet to reverse market-share losses.

Revenue from traditional relationship-based selling declined 9.7% to R$2.506 billion. Digital and omnichannel sales fell 15.5% to R$184 million, reflecting tax-related effects and changes to pricing and commercial policies.

Physical retail performed better, with revenue increasing 6.1% to R$230 million as Natura expanded its store network.

The company ended September with 1,125 stores in Brazil, including 203 company-operated locations and 922 franchises. It opened 93 stores over the preceding 12 months, although same-store sales declined 2%.

Supply-chain disruptions also generated additional inventory losses. Natura recognized R$50 million in above-normal inventory write-downs, primarily related to obsolete products and quality issues.

Those charges contributed to a decline in Brazil’s gross margin to 67.9% from 69.2%. Excluding the extraordinary inventory losses, the margin would have reached 69.6%.

Selling expenses increased 1.6% despite the revenue contraction, partly reflecting higher marketing investment. Administrative expenses, meanwhile, fell 16.2% as the company implemented efficiency measures.

Brazilian EBITDA consequently dropped 30.7% to R$304 million, while the regional EBITDA margin narrowed to 10.4% from 13.7%.

#### Latin American Operations Partly Offset Brazil Weakness

Natura’s Spanish-speaking Latin American markets provided some relief from the contraction in Brazil.

Revenue in those markets rose 6.7% in R$ terms to R$2.118 billion, although sales declined 0.9% in constant currency, indicating that foreign-exchange movements supported reported growth.

Natura-branded products generated a 9.2% increase in revenue in R$ terms, while Avon sales rose 13.4%.

Growth remained constrained by a slow recovery in Argentina and weaker momentum in Mexico.

In Mexico, the company cited declining consultant numbers, unfavorable revenue timing and supply-chain restrictions originating in Brazil. Those problems also affected product availability in the local market.

Argentina continued to experience a gradual recovery following the integration of Natura and Avon operations, with macroeconomic conditions limiting the improvement in sales activity.

Despite those challenges, regional profitability improved.

EBITDA in Spanish-speaking Latin America increased 88.4% to R$109 million from R$58 million, while the EBITDA margin expanded to 5.2% from 2.9%.

The improvement reflected lower selling and administrative expenses under Natura’s operating model.

Excluding nonrecurring restructuring costs and tax-related accounting effects, regional EBITDA would have reached R$250 million, equivalent to an 11.8% margin.

At the consolidated level, Natura estimated that EBITDA would have totaled R$636 million, with a margin of 12.6%, excluding extraordinary inventory losses, severance expenses, regional tax effects and reversals of corporate provisions.

#### Debt Falls R$442 Million as Cash Flow Improves

Natura reduced its net debt by R$442 million during the third quarter, bringing the balance to R$3.422 billion at the end of September from R$3.864 billion three months earlier.

Its net debt-to-EBITDA ratio declined to 1.83 times from 2.06 times in the previous quarter.

The improvement reflected positive cash generation and proceeds from receivables investment funds, which more than offset interest payments and settlements of financial derivatives.

Free cash flow from continuing operations reached R$122 million, reversing a negative R$103 million recorded in the corresponding quarter of 2025.

Free cash flow to the firm increased to R$268 million from R$10 million a year earlier, supported by stronger adjusted earnings and noncash accounting effects.

Natura also continued its administrative restructuring, launched in late 2025.

Since announcing its new operating model, the company has incurred R$320 million in severance-related expenses and completed approximately 95% of its planned workforce-related reductions.

The restructuring has contributed to lower overhead costs, although operational inefficiencies and increased marketing spending have continued to constrain profitability.

#### Management Warns Recovery Will Take Time

Chief Executive Officer Ale Carlucci acknowledged that the company’s operational challenges in Brazil will continue to affect financial performance in the near term.

“Resolving our internal bottlenecks and adjusting the structural drivers in Brazil is an effort that naturally takes time to deliver results,” Carlucci said in a management statement accompanying the quarterly earnings report.

The executive outlined three priorities for Natura’s next phase: restoring product availability and service levels, modernizing the relationship-selling model and strengthening innovation across its brands.

Management also indicated that the company does not intend to accelerate growth aggressively in Spanish-speaking Latin American markets, preferring to preserve profitability gains achieved through cost reductions.

The strategy reflects an effort to protect consolidated margins while Brazil’s operations undergo a more gradual recovery.

#### Nine-Month Revenue Declines 6.7%

Natura reported net revenue of R$14.953 billion for the first nine months of 2026, down 6.7% from R$16.024 billion in the corresponding period of 2025.

EBITDA fell 19.6% to R$1.425 billion, while the EBITDA margin contracted to 9.5% from 11.1%.

Brazilian revenue declined 10.1% to R$8.672 billion during the period, highlighting the continued pressure on Natura’s core market.

Revenue in Spanish-speaking Latin America decreased 1.5% in R$ terms to R$6.281 billion, although constant-currency sales increased 1.7%.

Despite returning to profitability in the third quarter, Natura accumulated a net loss of R$361 million over the first nine months of 2026.

That compared with a reported loss of R$1.882 billion in the same period of 2025, which included substantial charges related to discontinued operations.

The company continues to prioritize cash preservation, debt reduction and cost discipline as it works to restore sales growth and improve profitability in Brazil.

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Source: Brazil Stock Guide, https://brazilstockguide.com/insights/natura-swings-to-profit-as-brazil-sales-fall-9/