São Paulo, Brazil – March 6, 2025 Natura & Co, the Brazilian cosmetics powerhouse, is once again making headlines as it evaluates the potential sale of Avon outside of Latin America. This development, which follows months of strategic reassessment and exclusive negotiations with IG4 Capital, signals a pivotal moment for the company as it seeks to streamline its global portfolio and refocus on its core markets. The move comes amid a challenging period for the beauty giant, marked by financial pressures, a high-profile bankruptcy filing, and shifting consumer dynamics in the cosmetics industry.
A Tumultuous Journey with Avon
Natura & Co’s acquisition of Avon in 2020 was heralded as a bold step to create a global beauty empire, uniting two brands with deep roots in direct selling. Valued at over $2 billion, the deal aimed to revitalize Avon, a historic name struggling to adapt to e-commerce and changing consumer preferences. Natura, known for its sustainability ethos and strong foothold in Latin America, saw an opportunity to leverage Avon’s international presence to bolster its own growth.
However, the marriage has been anything but smooth. Avon’s U.S.-based holding company, Avon Products Inc. (API), filed for Chapter 11 bankruptcy in August 2024, weighed down by talc-related lawsuits and a mounting debt pile. While the filing was limited to API and did not directly impact Avon’s operations outside the U.S., it cast a shadow over Natura & Co’s broader strategy. The company reported a staggering net loss of 7 billion reais ($1.27 billion) in Q3 2024, a sharp reversal from the prior year’s profits, largely due to write-offs tied to Avon’s deconsolidation.
Despite these setbacks, Natura &Co has pressed forward with efforts to integrate Avon in Latin America, where the brand retains a loyal customer base. CEO Fábio Barbosa has touted progress in this “Wave 2” integration, citing a 5.4% revenue increase to 7.35 billion reais in Q2 2024, driven by strong performances in Brazil and Mexico. Yet, Avon’s international arm—spanning markets outside Latin America—has lagged, with an 8.4% revenue drop in the same period, prompting Natura to reconsider its global footprint.
Talks with IG4 Capital and Beyond the Potential Sale of Avon
In February 2025, Natura & Co announced it had entered exclusive talks with IG4 Capital, a Brazilian asset manager specializing in emerging markets, to explore selling Avon’s non-Latin American operations. The news sent Natura’s São Paulo-traded shares up 3.5%, reflecting investor optimism about a potential portfolio simplification. Analysts at JPMorgan hailed the move as a “pivotal piece” in Natura’s strategy, suggesting that divesting Avon International could unlock free cash flow from its Latin American operations and pave the way for higher dividends.
The exclusivity period with IG4 ended on February 28, 2025, and Natura has since confirmed it is continuing negotiations with the firm, albeit without exclusivity. Posts on X indicate the company is also weighing other options, such as partnerships or a spinoff, though no definitive path has been confirmed.
“Natura indicated it is still evaluating strategic alternatives for Avon outside Latin America, which could include a potential sale, partnership, or separation,” noted one observer on the platform, echoing the company’s official stance.”
IG4 Capital, known for its focus on distressed assets and operational turnarounds, could be a fitting partner for Avon’s international business. However, the negotiations remain in an “early stage,” according to Natura’s February securities filing, leaving room for other players to enter the fray. The company’s openness to alternative strategies suggests it is casting a wide net, determined to find the best outcome for a division that has become both a burden and an opportunity.
Why Sell Now?
The potential sale of Avon’s non-Latin American operations aligns with Natura & Co’s broader shift toward simplification. Over the past two years, the company has shed other global assets, including the sale of The Body Shop to Aurelius Investment in 2023 for £207 million and the divestiture of luxury brand Aesop. These moves reflect a deliberate pivot to focus on Latin America, where Natura and Avon together command a significant share of the beauty and personal care market.
Avon International, encompassing markets in Europe, Asia, and beyond, has struggled to replicate this success. Analysts point to a combination of factors: declining direct-selling relevance in developed markets, intensified competition from digital-first brands, and operational inefficiencies inherited from Avon’s pre-acquisition era. “The Avon brand still has value, but it’s a fixer-upper,” said Maria Costa, a retail analyst at São Paulo-based consultancy TrendsBR. “Natura might be better off letting someone else take on that challenge outside its home turf.”
The bankruptcy of API further complicates the picture. While Natura secured Avon’s non-U.S. operations through a $125 million credit bid in December 2024, approved by a Delaware court, the process underscored the financial strain of managing a sprawling global entity. Offloading Avon International could free up resources to bolster Natura’s Latin American stronghold, where reinvestments in marketing and technology are already yielding results.
Industry Implications
Natura & Co’s deliberations come at a time of upheaval in the beauty industry. Direct-selling giants like Avon have faced headwinds as consumers increasingly turn to online platforms and influencer-driven brands. Meanwhile, sustainability—a cornerstone of Natura’s identity—has become a mainstream expectation, leveling the playing field with competitors. A sale to IG4 or another buyer could signal a broader trend of legacy brands seeking new stewards to navigate this evolving landscape.
For Avon’s representatives, often dubbed “Avon Ladies,” the outcome remains uncertain as the potential sale of Avon looms . In Latin America, where the brand is integrated with Natura’s operations, business is expected to continue as usual. But in international markets, a change in ownership could bring restructuring—or revitalization—depending on the buyer’s vision.
What’s Next for the Potential Sale of Avon?
As of March 6, 2025, Natura & Co has not set a timeline for its decision, leaving investors and industry watchers on edge. The company’s next earnings report, due later this month, may shed light on Avon International’s performance and the progress of negotiations. For now, Natura remains tight-lipped, reiterating its commitment to “evaluating all strategic alternatives” in its latest statement.
The potential sale of Avon’s non-Latin American operations marks a critical juncture for Natura & Co. It’s a chance to shed baggage, refocus on strengths, and redefine its place in a competitive global market. Whether IG4 Capital or another suitor emerges as the buyer, or if Natura opts for a different path, one thing is clear: the beauty giant is poised for transformation. As Barbosa himself noted in a recent earnings call, “We believe in the potential of Avon, but we’re also realistic about what it takes to unlock it.” The coming months will reveal whether that potential lies with Natura—or someone else entirely.
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