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Tuesday, July 23, 2024

Natura Mulls Body Shop Sale in Global Retreat

Cosmetics manufacturer Natura &Co Holding SA is contemplating the sale of its Body Shop division as part of cost-cutting efforts, marking a reversal of its previous global expansion strategy.

Following the board’s approval to explore strategic alternatives for The Body Shop, including a potential sale, shares in the Sao Paulo-based company rose by 2.3%.

Natura had acquired the British retailer from L’Oreal SA approximately six years ago.

This move reflects Natura’s shift towards refocusing on its core Latin America business after grappling with pandemic-related disruptions and cost inflation amid the Ukraine-Russia conflict. Earlier this year, the company sold its luxury cosmetics brand, Aesop, to L’Oréal.

Analysts anticipate that the sale of The Body Shop could streamline the corporate structure and reduce costs while allowing Natura to allocate capital more effectively to its core strengths.

The divestiture of The Body Shop is considered the most likely scenario by JPMorgan Chase & Co analysts, potentially resulting in extraordinary dividends, particularly given the company’s expected net cash position following the Aesop sale.

Natura has experienced a 35% stock rally this year, outperforming Brazil’s benchmark Ibovespa index, which has gained only 6%. Natura’s dollar notes due in 2028 remained relatively stable at approximately 89 cents on the dollar, according to Trace data.

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