Natura forecasts 9% revenue drop in Q2 2026 due to weak Brazil performance
Natura estimates its net revenue for the second quarter of 2026 will fall between R$5.1 billion and R$5.2 billion, a projected decrease of 9% to 10% compared to the same period last year. This decline is primarily attributed to weaker performance in its Brazilian operations, a situation exacerbated by a cooling consumer environment and internal operational challenges. The company cited significant product shortages resulting from the stabilization of its new Integrated Planning system, an SAP update, and the relocation of production from the recently closed Interlagos factory in São Paulo. These issues, combined with a challenging macroeconomic landscape, led to a substantial drop in sales volume through its relationship-based sales channels. Furthermore, Natura noted that the implementation of new pricing policies and inter-channel commercial rules caused a short-term slowdown in its online channel. The transition of all franchise contracts to a new model also resulted in a temporary reduction of inventory in franchised stores, impacting sales to franchisees (sell-in). A temporary mismatch in taxes, concentrated in Q2 2026 due to changes in São Paulo's ICMSST, also contributed to the revenue pressure. While these factors negatively impacted Brazilian revenue, Natura highlighted consistent year-over-year growth in constant currency across all Hispanic region markets. The company anticipates a sequential increase in its reported EBITDA margin for the quarter, driven by reduced severance expenses and efficiencies from its new operational model, which partially offsets the negative impact of operational deleveraging. Full financial results for the second quarter of 2026 are scheduled for release on August 10.
Natura's projected revenue decline in Brazil for Q2 2026 underscores the intricate interplay between internal system overhauls and external market conditions. The company's operational adjustments, including SAP updates and factory relocation, appear to have created significant supply chain disruptions, impacting product availability and sales channels. This highlights a common challenge for large organizations undergoing digital transformation: balancing the necessity of modernization with maintaining business continuity. The reliance on a relationship-based sales model, while potentially resilient, proved vulnerable to stockouts. The company's strategic pricing and franchise model transitions also introduced short-term friction. Looking ahead, Natura's ability to navigate these internal complexities while capitalizing on growth in the Hispanic region will be crucial. The financial implications of these operational missteps, even if temporary, warrant close monitoring to ensure they do not impede long-term market share or profitability, particularly as consumer behavior continues to evolve in the digital age.
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