Natura &Co posted strong profitability in the first quarter of 2023, but said The Body Shop was “still showing top-line challenges” as revenues fell.

Natura reported a gross profit of Brazilian real (BRL) 5.4bn (£858m), up 2.8% from the BRL5.2bn (£835m) it reported in the first quarter of 2022. Adjusted EBITDA increased 41.3% to BRL841m (£133m) from BRL595m (£94m) the previous year.  

Net revenue was at BRL8bn (£1.2bn), up 3.4% in constant currency terms and down 2.8% in year-on-year BRL currency as compared with the same time last year.

The Body Shop continued to face challenges as revenues fell 16% in reported currency and 9.4% in constant currency terms to BRL849m (£134m). Adjusted EBITDA was 6.1%, down 30 bps year on year.

Natura &Co group CEO Fábio Barbosa said: “Natura &Co’s performance in the first quarter is in line with our plan and with our previous communication, as Q1 numbers show a solid improvement both in gross and adjusted EBITDA margin, while the company continues to put in action important structural changes in its portfolio, focusing on simplifying its structure and improving its capital structure.

“Excluding Aesop, Q1 of 2023 showed a strong profitability improvement, mainly driven by gross margin expansion across all business units and continuous cost control, that were partially offset by sales deleverage at The Body Shop, Avon Latam and to a lesser extent Avon International.

“This quarter’s gross margin expansion is driven by price increases carry-over and more favourable mix, more than offsetting the inflationary environment we continue to experience.”