Natura & Co: the errors and corrections underlying the change of command

With Fábio Barbosa, the thought of ​​a world platform for magnificence manufacturers ought to give strategy to a conglomerate of various corporations; Nature and Avon are likely to turn into one firm

That they had already been counted. With shares plummeting 70% in twelve months, struggles digesting the Avon acquisition, a steep lack of income and a red-tinged backside line, traders have had no doubts for months that the supervisor Roberto Marques had misplaced his situation. The worldwide challenge of Natura & Co.

The answer to the goat within the room got here as a shock final Wednesday, with the appointment of veteran govt (and firm director for six years) Fábio Barbosa to interchange Marques because the holding’s chief govt, accompanied by the choice to finish the buildup of the workplace of president within the identify of fine governance.

To journalists after which to analysts, Barbosa repeated the mantra that the thought is to scale back the scale of the holding, giving higher autonomy to the 4 enterprise models – Natura, Avon, The Physique Store and Aesop – to plan and execute their methods.

“The group has turn into bureaucratic as a result of construction set as much as search a sure concord between the assorted manufacturers. Now the purpose is previous. We’re dropping agility, corporations resent not with the ability to make some selections regionally, ”she mentioned.

In the end, he acknowledged, all of this had a damaging influence on each revenues and margin. Barbosa additionally mentioned he’ll reassess the geographies the place every model will stay, suggesting that some markets shall be deserted.

The speedy response was constructive and the corporate’s shares have been up 8% on B3 on the day.

Nonetheless, analysts and traders resented the dearth of particulars within the convention name held earlier this morning.

Extra responses, based on Barbosa, ought to come from the lean transition committee, made up of prime administration within the monetary, authorized and human assets areas, which is able to advise him on restructuring till the top of the yr.

However those that comply with carefully the seams that led to the change of command current a extra carefully associated narrative: the preliminary concept of ​​constructing a world platform of magnificence manufacturers is deserted to provide strategy to a conglomerate design of various corporations, with fashions of enterprise and completely different methods.

Avon + Nature?

On this new design, the most important drawback to be addressed is Avon Worldwide, which is current in 38 nations and carries a worn-out model, with declining gross sales and hitherto poorly digested by the group.

To resolve this drawback, the actions of Nature and Avon are likely to turn into one sooner or later, assures an individual who follows the matter carefully.

The manufacturers would coexist and Avon would start to include the values ​​of Nature into its merchandise. “Avon is meant to be the Nature of Europe. The concept is to deliver environmentally progressive merchandise to different nations, with relations with the Amazonian communities “.

If these new instructions are confirmed, the one who will achieve house within the group is João Paulo Ferreira, CEO of Natura & Co for Latin America, an govt who satisfies the market and is seen as somebody who really understands the enterprise. At present Avon is led by Romanian Angela Cretu, an govt with extra expertise in merchandise than in administration.

When requested within the interview with reporters about doable modifications in control of the 4 enterprise models, Fábio Barbosa mentioned that each one have been confirmed of their place.

What went flawed?

This can be a lady with a twist in technique and who must show her price.

Ever since a sequence of acquisitions of worldwide magnificence manufacturers started – first Aesop, then The Physique Store, and eventually the large Avon, the outdated dream of controllers – Natura has marketed the concept it could turn into a Brazilian model of The French L’Oréal, which is a world platform with a number of manufacturers.

Roberto Marques embodied this challenge and, after placing collectively the Avon buy, he created the Natura & CO holding to make it occur.

The concept was that the centralized construction would permit for the seize of synergies between the 4 enterprise models (one for every model) and would nonetheless be accountable for the strategic, monetary and other people planning of all of the manufacturers within the group.

Over time, nonetheless, the holding started to show to be an costly construction that stifled the decision-making strategy of the enterprise models. Moreover, some shareholders have begun to argue that the acquisitions made didn’t translate right into a multi-brand firm, however right into a magnificence group with 4 very completely different companies.

Natura and Avon have targeted on direct promoting; Aesop, an organization of extra artisanal merchandise with excessive added worth; The Physique Store is a series of bodily shops. “This set has by no means fashioned a magnificence model platform,” says a supervisor with a excessive place within the firm.

An costly and inefficient facility

Final yr alone, the holding value the group greater than R $ 550 million. If the preliminary concept was that the account wouldn’t exceed 0.8% of gross sales, its relative weight has elevated as the corporate misplaced income to 1.4%.

Irritated by the scale of the account and, much more so, by the dearth of readability on the allocation of this value, analysts and traders had lobbied the corporate to downsize. Roberto Marques’ response was that the power was extraordinarily environment friendly and there was little room for discount, as 90% of the prices have been operational.

With the centralization of the holding’s planning and selections, the CEOs of every of the models have turn into “uncomfortable and claustrophobic,” within the phrases of 1 supervisor.

“The holding will determine through which geographic areas every model will work, however every CEO will determine which product traces, if there shall be fewer traces. They’ll have targets and make selections, with lots of freedom, ”mentioned Fábio Barbosa.

declining efficiency

After reaching surprisingly good leads to the primary yr of the pandemic and seeing its market worth peak at almost R $ 84 billion in July final yr, Natura has begun to face a decline.

Rising world inflation has made the value of inputs costlier and eroded synergies positive aspects, the conflict in Ukraine has introduced down gross sales in Europe, the third wave of covid in the US has brought on an overcrowding of The associates of The Physique Store on the finish of the yr. the yr. Along with macro components, dealing with errors have additionally been added.

One of many essential components that drove gross sales in Brazil was the change within the remuneration of Avon consultants to align it with the Natura mannequin.

With the thought of ​​lowering income and rising engagement, compensation has turn into much less transactional and extra targeted on rising productiveness. In consequence, the marketing consultant base has shrunk considerably and productiveness positive aspects haven’t come, instantly impacting income.

The person for the job?

Fábio Barbosa made a profession and have become well-known away from the buyer items sector. He chaired ABN Amro Brasil and Santander banks in addition to the mighty Febraban. And, after a interval at Grupo Abril through which he was unable to reverse the decline of the media firm, he started to commit himself to the boards of enormous corporations, comparable to Itaú, Suzano and Ambev, in addition to Natura itself.

Conscious that his previous could possibly be the topic of some questioning, in an interview with reporters Barbosa pressured that earlier than migrating to the monetary sector he spent a couple of years at Nestlé.

Within the convention name with analysts, two of them needed to listen to from the manager how he thought his expertise may contribute to the success of the cosmetics group.

“The sensation is that Nature may have achieved a extra strong succession course of by recruiting an business govt with multinational expertise,” mentioned a personal analyst on the buy facetunderlining that the modifications of command in Nature have been extra frequent than fascinating and with some a minimum of questionable selections alongside the way in which, comparable to that of Roberto Lima, coming from the Vivo phone firm and who lasted two years in workplace.

“Anybody who wonders if Fábio is the fitting man for the position is as a result of they nonetheless do not perceive what shall be accomplished. He would not perceive and would not want to grasp the wonder business. He would be the transformation agent from one challenge to a different. The CEOs of every firm want to grasp the enterprise, “says one supervisor.

Very near controllers Guilherme Leal, Luiz Seabra and Pedro Passos, Barbosa shares the identical appreciation for sustainability in enterprise. On the helm of ABN Amro Brasil, he pioneered this agenda within the Brazilian monetary system within the Nineties.

On this sense, the selection of its identify additionally represents the reaffirmation of the values ​​of the founders who, within the midst of the dysfunction created by the earlier mannequin, have been put in danger.

Simply over a yr in the past, Danone’s poor monetary efficiency led to the firing of CEO Emmanuel Faber, and the corporate’s sustainability credentials have been touted by some as a distraction from what actually issues. This yr, one other star of so-called stakeholder capitalism, Unilever, grew to become the goal of comparable questions.

Major ESG reference within the native market, Natura has not gone via this. However concern definitely exists – and this was evident in Barbosa’s closing message to reporters Wednesday: “It is essential that an organization like this has good outcomes to point out that we are able to actually achieve success by doing issues with this head.”

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