Natura Unveils Major Restructuring and Leadership Overhaul

Strategic Shift Aims to Boost Efficiency and Shareholder Value / Reuters

Brazilian cosmetics giant Natura has revealed a comprehensive plan to revamp its corporate structure and leadership team, marking a significant shift in its operational strategy. The company intends to integrate its currently listed holding entity, Natura&Co, into its subsidiary, Natura Cosmeticos, positioning the latter as the new parent firm with shares traded on Brazil’s B3 stock exchange. This restructuring proposal, which requires shareholder approval scheduled for April 25, 2025, is designed to streamline operations and enhance long-term shareholder value by enabling future profit distributions from Natura Cosmeticos. The announcement underscores Natura’s ongoing efforts to optimize its business model following a decade of aggressive expansion through high-profile acquisitions, including Avon Products, The Body Shop, and Aesop, and subsequent challenges in maintaining profitability.

The restructuring effectively reverses a strategic move made in 2019 when Natura acquired Avon Products, a deal that transformed it into a global beauty leader. Notably, Avon’s U.S. operations were excluded from that acquisition, and the company has since shifted its focus toward deleveraging and strengthening its core operations in Latin America. Alongside the structural changes, Natura disclosed a leadership shake-up. Fabio Barbosa, who has served as CEO of Natura&Co since 2022 and spearheaded the divestitures of Aesop and The Body Shop, will transition to chairman of the new parent company. Guilherme Castellan, the current Chief Financial Officer, will exit the group, remaining until May 12, 2025, to ensure a smooth handover. Joao Paulo Ferreira will continue as CEO of Natura Cosmeticos, joined by Silvia Vilas Boas, who stays on as CFO. Both executives are poised to lead the restructured entity, with the backing of Natura’s founders and controlling shareholders, who will retain their positions on the board.

Natura’s strategic pivot comes amid a broader quest for financial stability and operational efficiency. Over the past decade, the company pursued rapid growth through acquisitions, but profitability remained elusive, prompting management to refocus on its Natura and Avon brands in Latin America. Recent financial performance offers a glimpse of progress, with Natura reporting consolidated net revenue of $1.3 billion in the fourth quarter of 2024, a 16.1% increase year-over-year, driven largely by the Natura brand’s strong showing in Brazil. However, challenges persist, particularly with Avon’s operations outside Latin America, which the company is evaluating for potential divestiture. The proposed restructuring aims to create a leaner, more agile organization, positioning Natura to capitalize on its Latin American stronghold while addressing lingering inefficiencies from its global expansion.

The stock market response to the announcement was immediate and telling. On the day of the reveal, Natura&Co’s stock (NTCO3.SA) closed at $9.65, down 2.43% from its previous close of $9.89, reflecting a notable dip in investor confidence. Trading volume surged to 32,307,600 shares, far exceeding the three-month average of 244.35, signaling heightened market interest. This decline contrasts with the potential upside of a streamlined structure, suggesting that investors may harbor concerns about the transition’s complexity or the loss of key leadership figures like Castellan. To provide deeper insight, key stock metrics as of that day include a 52-week range of $8.95 to $18.85, a market cap of $13,662.71 million, and a forward P/E ratio of 12.48, offering a snapshot of Natura’s valuation amid this pivotal moment.

Delving into the implications, the restructuring and leadership changes could herald a new chapter for Natura, aligning its corporate framework with its strategic priorities. By consolidating into Natura Cosmeticos, the company aims to simplify its governance and enhance profit-sharing capabilities, a move that could resonate with shareholders seeking tangible returns. The leadership transition, while introducing fresh dynamics with Barbosa’s shift to chairman and the continuity of Ferreira and Vilas Boas, also raises questions about stability during this transformative phase. The high trading volume and stock price drop indicate a mixed reception, possibly reflecting uncertainty about execution risks or the future of Avon’s international business. Yet, Natura’s reaffirmed focus on Latin America, bolstered by recent revenue growth, suggests a foundation for recovery if the restructuring succeeds.

For stakeholders, the upcoming shareholder vote on April 25, 2025, will be a critical juncture, determining whether Natura can fully implement its vision. The company’s ability to communicate the benefits of this overhaul, from operational efficiency to enhanced shareholder value, will likely influence market sentiment in the coming weeks. Meanwhile, the ongoing evaluation of Avon’s non-Latin American operations adds another layer of intrigue, as a potential sale could further reshape Natura’s global footprint. As the cosmetics group navigates this complex transition, its blend of structural reform and leadership renewal positions it at a crossroads, with the promise of revitalization tempered by the challenges of execution and market perception.