NTCO - Natura & Co may soon offload The Body Shop

2023-08-28 18:30:18 ET

Natura & Co (NYSE: NTCO) is considering offloading “The Body Shop” – its world-famous brand of skincare and cosmetic products.

Sales at The Body Shop have continued to decline

The Body Shop is having a difficult time maintaining its market share even though beauty as a sector has been resilient this year amidst the broader inflation-driven weakness in retail.

Earlier this month, the Brazilian conglomerate said its Body Shop saw another 12% decline in sales to $163.7 million in the second quarter despite efforts to cut costs and improve margins.

Note that sales at the cosmetics and skincare brand have now eroded for several quarters in a row.

On Monday, therefore, the board of Natura & Co “authorised its management to explore strategic alternatives for The Body Shop” including a potential sale.

Natura is in the process of unloading Aesop as well

Natura & Co is the company behind notable beauty lines including Avon. In April, it also agreed to sell Aesop – its luxury cosmetics brand to L’Oreal for about $2.50 billion.

But it’s not a given yet that considering strategic alternatives for The Body Shop will indeed result in a sale, as per the company’s securities filing on Monday.

There can be no assurance that this process will result in any transaction. Natura does not intend to provide updates on this matter unless it determines further disclosure is appropriate or required.

According to analysts at Itau BBA, though, it will be constructive for Natura & Co to sell The Body Shop as it may help the personal care giant improve its bottom line in the coming years.

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