2020 Annual Report
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2020 annual report Purpose To nurture beauty and relationships for a better way of living and doing business. Beliefs We are passionate agents of change. We build relationships based on transparency, collaboration and diversity. We are committed to integrity and hold ourselves accountable. We find the courage to challenge the status quo and go beyond. We honor and respect the interdependent Aspiration nature of all things. We will dare to innovate to promote positive economic, social and environmental impact. 8 Who we are 12 Natura &Co in numbers 14 Global footprint Our 16 Strategy and governance 1 group 20 Message from the Board of Directors 26 Financial highlights 30 Integration 32 COVID-19 response Our 34 An omnichannel group 38 Innovation and products businesses 40 Avon | Major launches 2 42 Natura | Major launches 44 The Body Shop | Major launches 46 Aesop | Major launches 48 Message from the CEOs 52 We must act. Now. 56 To address the climate crisis and protect the Amazon 60 To defend human rights and be human-kind Commitment 64 To embrace circularity and regeneration 3 to Life Natura &Co Our group 8 9 Annual Report — 2020 We are a purpose- driven group made Who up of four iconic beauty companies: we are Avon, Natura, The Body Shop and Aesop. Natura &Co operates in more than 110 countries, with over 3,700 stores, 35,000 employees and 8 million representatives and consultants. We are united in the belief that we can nurture beauty and relationships for a better way of living and doing business, and we are proud to be the world’s largest B Corp. Natura &Co Our group 10 11 Annual Report — 2020 Founded in 1886, Avon Established in 1969 in São Founded in 1976 in Established in 1987 in connects people in more Paulo, Brazil, Natura creates Brighton, England, Melbourne, Australia, than 70 countries, using products and services that The Body Shop is a Aesop has since expanded the power of beauty to promote a harmonious global beauty brand to 27 markets around the transform women’s lives relationship for the individual and a certified B Corp. globe, with each of its 247 for the better. with oneself, with others signature stores having and with nature. its own unique design. 6.3 million* representatives across the world Natura believes that its value and The Body Shop seeks to make positive Aesop is renowned for creating products sell its iconic products, building their own longevity are connected to the ability change in the world by oering high- with meticulous attention to detail, beauty businesses. Avon believes a better to contribute towards sustainable quality, naturally-inspired skincare, body along with a unique exploration of the world for women is a better world for all, development. Currently present in 10 care, hair care and make-up produced intersection of botanicals and science to and is committed to acting for gender countries, it is an icon of direct selling in ethically and sustainably. Having pioneered create sensorial and highly ecacious equality, speaking out about issues that Latin America (and the beauty market the philosophy that business can be a force formulations for skin, body, hair, fragrance matter and creating positive change. leader in Brazil). Natura has 2.1 milion* for good, the brand still has this ethos as and home. Aesop became a B Corp Together with Avon Foundation, the consultants, almost 600 company-owned its driving force today. The Body Shop certified company in 2020. company has donated over US$1.1 billion, and franchised stores, as well as a growing operates around 2,800 retail locations in with a focus on tackling gender violence online platform. In 2014, it became more than 70 countries. and breast cancer. the first publicly traded company to be certified as a B Corp. *Given that hundreds of thousands of representatives and consultants sell both Avon and Natura products, Natura &Co’s 8 million total number of representatives and consultants is less than the sum of Avon’s and Natura’s separated figures. The total number also includes The Body Shop At Home beauty consultants. Natura &Co Our group 12 13 Annual Report — 2020 Natura &Co in numbers 35,000 32% reduction* employees in greenhouse gas emissions achieved by Natura R$ 36.9 48% 2 million billion women — in leadership hectares positions of conserved forest in the Consolidated Amazon region net revenue R$4.2 2020 R$489 58 sourcing billion million communities invested in social causes based on ethical trade in — 15 countries Adjusted EBITDA1 107% 2,489 2020 growth tons R$399.5 in social selling and of virgin plastic replaced ecommerce sales by recycled plastic million in packaging — 1Excludes eects that are not considered to be recurring or comparable between Underlying periods analyzed. 2The underlying net income is calculated before the eects of the acquisition of 2 Avon and does not take into account transformation costs, discontinued operations net income expenses, PPA amortization eect and non-controlling interests. Chart without scale *Compared with business as usual in the same period (2020). 2020 Natura &Co Our group 14 Annual Report — 2020 Global footprint 110+ countries 8+ million consultants and representatives 3,700+ stores and franchises Avon Natura The Body Shop Aesop Natura &Co Our group 16 17 Annual Report — 2020 Strategy and governance Our path to growth Integration with Avon: enhanced with the as leveraging Avon’s gain synergies and through financial independence and enhanced self- development of an expertise to expand its The power of &Co explore combined esteem. Visionaries who embraced a dierent way of integrated customer footprint in other markets. revenue opportunities doing business founded all of our brands. We intend to experience focused It’s impossible to over-emphasize how unprecedented for Natura and Avon in keep their purpose alive and invite others to share this on personalization Sustainability: a year 2020 was and how we have started a new one Latin America, including journey with us. and loyalty. The same direct investments still surrounded by uncertainties that require us to a new commercial is expected for The in our sustainability make cautious, prudent and empathetic decisions. model and the Our three-year strategic plan foresees a significant Body Shop through agenda for 2030, However, the challenges that we have been facing development of revenue increase and margin expansion by the end the evolution of the known as our during this period have been not only proof-points but an ecosystem of of 2023. This growth will be distributed across all ecommerce platform. Commitment to Life, also catalysts for our overall strategy of building a global, complementary, geographies. In Latin America, where we are the market in order to define clear multi-brand, multi-channel, purpose-driven group, one collaborative and leader, we have significant opportunities with the Brand & innovation: targets that contribute that will resonate in the post-COVID world. symbiotic businesses. integration of Natura and Avon. We also see the potential enhance Natura’s to our goals each year. Accelerate the to enter, or to expand our presence in, important beauty brand dierentiation, We will also strive In the midst of the global pandemic, we took care of transformation of Avon markets where we are still under-represented, namely Asia to drive consumer to support progress our networks and integrated Avon into Natura &Co, an worldwide to enable and the United States. These goals will require us to define preference and desire. of the world’s addition that expanded our global reach and nourished growth through brand and implement regionalized and brand-specific plans for Avon and The Body Environmental, Social our passion for connections and relationships. We rejuvenation, a targeted the continued evolution of our omnichannel strategy. Shop to keep on and Governance (ESG) are now positioned to be the unparalleled leader in product portfolio, a new their path to brand agenda by fostering the direct-to-consumer space with a business model operating model and rejuvenation, increasing a collaborative, multi- that demonstrates proven resilience and a formidable continued investment in the quality and pace lateral approach. platform for growth. Our four iconic brands have a Our four iconic upgrading IT systems. of innovation. Expand unique product portfolio across all price ranges, with Aesop’s product Continued operating clear roadmaps for the future, and distribution through a Digitalization & portfolio into in-demand model improvement: variety of channels. brands have a ecommerce: dierentiated categories keep up the flawless reinforce our such as fragrances and execution, with focus At the same time, the pandemic led to the acceleration unique product commitment to social scented home. on simplification and of our digitalization plans. We aim to keep up this selling and ecommerce, eciency, exceeding momentum in order to amplify our message and to portfolio across all leveraging digital Regional strategy: guidance on margin become truly omnichannel. The peer-to-peer sales momentum across all develop an entry strategy targets and procurement model, far from going out of fashion, is shifting towards price ranges, with brands. Avon and Natura for the group in China savings. Invest in new social selling, and the power of digital allows us to go to further benefit from and accelerate plans IT infrastructure to beyond, evolving it into a model that is more in touch relationship selling using for Japan. The Body improve cyber security, with our consumer’s way of life and demands for clear roadmaps social media channels Shop to expand its At data strategy, human beauty and well-being. This approach also oers us the and digital tools. Aesop’s Home channel in the resources and ERP opportunity to drive female empowerment, for the future.