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Good morning, ladies and gentlemen. Thank you for waiting. At this time, we'd like to welcome everyone to Natura &Co Conference Call on the First Quarter Results. Today with us we have, Mr. Roberto Marques, Executive Chairman of the Board for Natura &Co; Mr. João Paulo Ferreira, Natura's CEO; Mr. Marcel Goya, Director of Finance and Investor Relations; Mr. Luiz Palhares, Investor Relations.
This event is being recorded. [Operator Instructions] We have simultaneous translation into Portuguese, and questions may be asked normally by participants connected from abroad, either in English or Portuguese. [Operator Instructions] We have a simultaneous webcast that may be accessed through Natura's IR website, www.natura.net/investors. The slide presentation may be downloaded from this website. There will be a replay facility for this call on the website after the end of the event.
Before proceeding, please be informed that forward-looking statements are being made under the safe harbor of the Securities Litigation Reform Act of 1996. Forward-looking statements are based on the beliefs and assumptions of Natura management and on information currently available to the company. They involve risks, uncertainties and assumptions because they relate to future events and, therefore, depend on circumstance that may or may not occur in the future. Investors should understand that general economic conditions, industry conditions and other operating factors could also affect the future results of Natura and could cause results to differ materially from those expressed in such forward-looking statements.
Now I'll turn the conference over to Mr. Roberto Marques, Natura &Co's Executive Chairman of the Board. Mr. Marques, the floor is yours.
Thank you, Natalie. Good morning to all of you, and thanks again for joining us on this conference call to present Natura &Co first quarter results.
As this call comes short after our Natura &Co day, during which the CEOs of the 3 brands made extensive presentation, we are in a slightly smaller configuration than our previous call. I'm joined today by João Paulo, the CEO of Natura, who will present his company's Q1 performance; and Marcel Goya, Finance and Investor Relations Director, who will present the key consolidated figures for the quarter. I'll comment on the performance of The Body Shop and Aesop, and then we'll be happy after our remarks to take your questions. As usual, we'll be referring during this call to the presentation that you can also download on our website.
So let me start on Slide 3, which is the key highlights of Q1. Overall, I would say that Natura &Co is off to a strong start of the year with solid top line and bottom line growth in the quarter. Pro forma consolidated net revenue was up 11% and comparable consolidate EBITDA rose by a very solid 58.4% on a pro forma basis. I think we are firing up in all cylinders with each of our 3 businesses contributing to this very satisfactory performance. Natura regained its leadership position in the cosmetic toiletries and fragrance market in Brazil, confirming that the company's back on track on its home market, and it continued to post a strong growth elsewhere in Latin America. The Body Shop turnaround is already underway, and it posted its best first quarter in 8 years with very encouraging sales, EBITDA and EBITDA margin growth in the quarter. And Aesop continues to show rapid growth and improved profitability. Our net debt-to-EBITDA ratio at 3.3x is ahead of our estimates for the period.
The group also made its successful debut on international capital markets through a $750 million bond issue, which is fully hedged to protect us against any exchange rate fluctuations. This bond matures in 2023 with a coupon of 5.375%. And this quarter, also, we saw further advances in sustainability.
With this, let me now hand over to Marcel Goya to provide greater detail on our consolidated financial performance.
Thank you, Robert. On Slide 5, we begin with our consolidate net sales, which stood at almost BRL 2.69 billion in the quarter. On a reported basis, this represents record sales growth of 55.5%, while on a pro forma basis, including the Body Shop in both periods, this represents a health year-on-year increase of 11% in Brazil reais. All 3 brands posted growth in the quarter with Natura up 6.7%, the Body Shop up 8.5% on a pro forma basis and Aesop growing by a very strong 30.8% in a constant current (sic) [ currency ]. We go into this in great detail shortly.
On Slide 6, we look at our EBITDA, which rose by a strong 58.4% on a comparable and pro forma basis in Brazilian reais. Just to remind you in Q1 '17, our reported EBITDA was BRL 365 million. However, excluding this PIS/COFINS tax reversal of BRL 155 million and including The Body Shop EBITDA, which was a negative BRL 8.5 million, our comparable and pro forma EBITDA stands at BRL 201 million. On a comparable basis, Natura, The Body Shop and Aesop all contributed positive to EBITDA in the quarter.
Before talking about net income, let me provide some details on Slide 7 about our financial results. In Q1 '17, we had a positive effect of BRL 106 million from the interest of group PIS/COFINS reversal. In Q1 '18, our costs related to financing the acquisition of The Body Shop was BRL 95 million, which is fully hedged. So in the comparable financial results, again, excluding The Body Shop-related effect, we have a cost of BRL 60.7 million versus BRL 118.6 million in 2017.
Let's turn now on Slide 8 to our consolidated net income, which rose substantially to a net profit of BRL 88 million in Q1 '18 from a loss of BRL 1.3 million in the same quarter last year. On a comparable pro forma basis. Again, we are looking at comparable Q1 '17 figures, which excludes the benefit of the tax reversal and includes a net loss at The Body Shop, as you can see in the graph. Similarly, in Q1 2018, our net income of BRL 88.2 million excludes interest of BRL 64 million on costs related to The Body Shop acquisition. Reported net income was BRL 24.4 million.
Let me conclude on Slide 9 with some balance sheet considerations. The free cash outflow in the period was BRL 351 million, in line with our expectations. This is due to the inclusion of The Body Shop number in a period of cash consumption, which accounts for BRL 124 million. In addition, we had BRL 64 million coming from financial costs related to the acquisition of The Body Shop. Finally, Natura had a temporary increase of BRL 200 million in inventory to roll out its operation plan.
As Roberto said in his introductory remarks, we are ahead of our estimates regarding our net debt-to-EBITDA ratio, which stood at 3.3x at the end of Q1. Let me reiterate our targeted return to a preacquisition investment ratio of 1.4x EBITDA by 2021, 1 year ahead of our initial plan. At the end of 2018, we expect to improve our net debt-to-EBITDA ratio.
I will now hand over to JP, who will comment on Natura's performance in the quarter.
Thank you, Marcel. Hello, everyone.
We'll begin on Slide 11 with our net revenues. It grew by 6% in the quarter to nearly BRL 1.7 billion. This growth was driven both by Brazil and especially by our remaining operations across Latin America, building on the success of our new relationship selling model, which is driving continued productivity gains. In Brazil, according to Euromonitor, we regained market leadership in the CFT market in 2017, and our key categories continued to perform well in Q1.
Net sales in Brazil grew by 0.8% in the first quarter or 3% adjusted for the commercial calendar effects, as this year, our Mother's Day campaign shifted to Q2. Consultants' productivity continue to show very strong growth of 21.8%, more than compensating the already expected 18.8% drop in the average number of consultants.
We continue to make further inroads in our multichannel approach, and our online business almost doubled, now accounting for almost 4% of sales in Brazil. As mentioned in previous occasions, our business is becoming increasingly digital, and more than 550,000 consultants are now using our exclusive app that supports their beauty consulting activities.
Latin America continues to be a growth engine with sales up 20.2% (sic) [ 20.3% ] on a reported basis and 23.1% at constant exchange rates. We saw very solid growth in Argentina, Mexico and in Chile. By the way, Chile is the first country to introduce the new relationship selling model, and we've already seen encouraging results. The region is also posting significant consultant productivity gains with a 9.5% improvement in the quarter.
Let's now turn to Slide 12 to Natura's EBITDA in the quarter. On a comparable basis, EBITDA grew by 30.3% in the quarter to BRL 250 million. Considering that our EBITDA in Q1 of last year benefited from a tax reversal of the PIS and COFINS tax rate of BRL 155 million. So our Q1 '18 margin rose 200 basis points to 14.9%.
In Brazil, on a comparable basis, EBITDA grew by 9.4% to BRL 187 million with margin growing by 120 basis points, driven by increased SG&A costs. These figures also exclude last year's PIS/COFINS' tax reversal. And in Latin America, EBITDA grew by 83.3% and an even stronger 88.7% at constant exchange rates. EBITDA margin improved by 470 basis points to 13.6% from better operating leverage and strict cost control.
You know that Natura &Co pursues triple bottom line results, so on Slide 13, we highlight some advances in sustainability. In Q1, Natura's carbon emissions were ahead of target, benefiting from more favorable category mix and a more efficient order cycle. Also worth mentioning that The Body Shop has already collected 5.8 million signatures for its campaign to end animal testing on a global scale, and it's well on its way to achieving our objective of gathering 8 million signatures. As of the end of Q1, Natura has added its voice to that campaign.
I will now hand back to Roberto to comment on the key highlights of Aesop's and The Body Shop's performance.
Thank you, JP, and again, congratulations to you and to all of our Natura associates to a great start of the year running our Natura business.
Let me now talk a little bit about Aesop, so on Slide 15. Aesop continue its growth story in Q1, as shown on Slide 15, which details its net sales. As you see on this graphic, sales rose by a very strong almost 31% at constant current and an even stronger 39.2% on a reported base in Q1 to over BRL 200 million. Most interesting, on a like-for-like basis, sales were up 18%. Aesop continued its expansion, and at the end of Q1, it counted 305 owned retail doors, of which 208 signature stores and 97 counters in department stores. This represents a total of 40 additional points of sales over the past 12 months.
On Slide 16, you see also similar strong growth in Aesop's EBITDA and margin. At BRL 27 million, EBITDA in Q1 was up by 118.4% at constant exchange rates while margins grew by 500 basis points to 13.4%. This is very exciting performance, and Aesop is steadily contributing to the group growth. Again, I want to congratulate Michael O'Keeffe, CEO of Aesop, and his entire associates group at Aesop for posting such a strong result to start the year in 2018. Let's now turn to The Body Shop on Slide 18. In Q1, we already started seeing the initial positive effect of the 5-pillar turnaround plan that is being implemented at The Body Shop. On a pro forma basis, net sales were up 8.5% at constant exchange rates and 16.5% on a reported base to over BRL 800 million. Let me give you a heads up that half of this growth is coming from a favorable commercial calendar effect in Q1. This will have an impact in Q2. The remainder was driven by franchise, owned stores and double-digit growth in all lines in terms of channels.
Now in terms of geographies, growth was driven by EMEA and Asia Pacific as well the retail channel in North America. The Body Shop ended the quarter with a total of 3,006 stores with a net reduction of 43 stores, of which 31 owned stores, as we continue to selectively adjust our network. Also on a positive note, our like-for-like of our owned stores grew 5%, and our e-commerce grew 20% in the period.
On Slide 19, let's look at The Body Shop EBITDA. Body Shop EBITDA stood at BRL 57.1 million in Q1 with a margin of 7.1%. This compares with a negative margin in Q1 2017. This improvement is largely due to lower discounts in occupancy costs in owned stores and better franchise sales.
I also want to take this opportunity and congratulate David Boynton and all of our Body Shop associates throughout the globe for a very strong start of the year.
To conclude on Slide 20, what are the key takeaways of this quarter? First, Natura &Co is clearly making headway with solid top and bottom line growth in this first quarter. Second, all the 3 brands and businesses contributed to this solid performance. Natura, as JP talked about it, saw a confirmation of its recovery in Brazil, as evidenced by this growing market share and regained market leadership in CFT and continues to expand in Latin America. The Body Shop's turnaround is already underway, and the team are fully mobilized around the company's 5 pillars transformational plan. And Aesop continued its growth story. And third, with a solid first quarter performance, Natura &Co is on track to deliver the medium-term targets we presented recently, namely, high single-digit growth in net sales and low double-digit growth in EBITDA on a compound annual growth rate basis through 2022.
Thank you for your attention, and now we are happy to take your questions.
[Operator Instructions] Our first question comes from Guilherme Assis with Brasil Plural.
I just wanted to touch a few points here. And the first question, actually goes to Roberto Marques. And Roberto, in your remarks, you mentioned that The Body Shop results were benefited by like a positive calendar impact, if I'm not mistaken, right? Can you talk a little bit more about this impact from the quarter? And what should be the impact on the second quarter, if we should expect a lower growth rate for The Body Shop because of that? And also, I think one of the surprises of the quarter was the good margin for The Body Shop. I had the impression that, actually, since it was a low seasonality quarter, you're going to deliver a lower EBITDA margin, right, for The Body Shop. Can you talk about the impact of this potential calendar effect on The Body Shop as well? That's one question. And also can you also give us a breakdown of how much Argentina represents of your LatAm operations and if you see any risks with the current situation there and the devaluation of the peso for your business? Those are my questions.
Guilherme, Roberto here. So I'll start with The Body Shop and then I'll ask JP to comment on Argentina specifically for Natura. But on The Body Shop, I mean, you saw the growth on Q1, which is roughly 8%. We believe half of that was benefit on the commercial calendar year. So if you think about -- we're still very confident for the remaining of the year in delivering plans and some of our commitments that we already shared with all of you. But of course, the benefit on this commercial calendar was some of the changes in holidays that benefit The Body Shop globally. Also, some activities that pull from end of the year to the beginning of this year, that also had a positive impact. But again, overall, we feel very good about how the business is performing and very confident about this year in terms of the results for The Body Shop. I'll turn to JP to comment specifically on Argentina. Thank you, Guilherme,
We don't disclose the relative -- the exact size of each operation in Latin America. However, as you know, Argentina is one of the largest CFT markets in the region, right, and is one where we're very well established for long. So Mexico is a larger market, but we have been there for fewer years, right? So from that, you can roughly estimate. Now when it comes to the risks, first of all, let me highlight that not only we're very committed to -- but more importantly, grateful for the Argentinian consumers and consultants. They have awarded us an outstanding business, outstanding business. We're now the third brand in the CFT market, and we have been gaining market share consistently over the last few years, becoming the preferred CFT brand in the country. So just to highlight that -- how important it is for our business and for our hearts. Now having said that, the volatility that we're seeing in the economy does not worry us much because it's within our -- in the range that we have in our plans, and we're fully protected. We're fully protected for many reasons. One is that part of our manufacturing is local. Second is that we also export products and services, right, not only importing some goods from Brazil, but also exporting from Argentina. So with that said, we are very confident that the risks are fully manageable in the Argentinian business.
Okay. I think that's clear. If I could just go back for Roberto for a few -- a follow-up. You mentioned -- that about half of the 8.5% growth was related to these calendar adjustments, so changing commercial policies or practice within the calendar. Is it fair to expect then a more flattish results for the second quarter since we should see a comeback of this calendar effect? And also if you comment a little bit on the impact on the EBITDA margin of these changes as well, because my impression, at least, is that The Body Shop also not only had good growth, but also very positive margins. I just wanted to have a grasp of how much of these good margin is sustainable as well. That's my follow-up question.
Guilherme, thank you again for the follow-up. I mean, we're not going to provide specific guidance for Q2, as you know. But again, what I can tell you is that this is a factor of -- many other factors of the performance of the sales. Again, fair to say that we shouldn't be expecting an 8% growth on The Body Shop since half of that was the commercial calendar. But I can't comment specifically what to expect on Q2, other than, again, as I indicated, we continue to be very confident at The Body Shop performance of this year and probably improving versus prior year, both on top line and bottom line. From a margin perspective, as you know, we are putting a lot of effort on the turnaround plan in terms of really looking at stores that are not profitable, looking our footprint overall. So I think it is expected that there's an improved margin. As we indicated in our guidance for 2022, our goal is to double the EBITDA margin for The Body Shop, and we are on track to deliver that.
Next question, Robert Ford, Bank of America.
Congratulations on the international growth and the underlying improvements. JP, I was very impressed by the expense reductions in Brazil. The sales, marketing and logistics were down 5.2%. And I was curious, is that a timing issue? Or is there something structural in the cost structure? And then given the competitive dynamics, are you comfortable with your existing brand investments in Brazil? Or do you see a need to take some of these savings and redirect them into the brand?
Robert, thanks for the question. It's not a temporary effect at all. It already includes also some negative news in it, as mentioned before. I mean, amortization and depreciation, cost of intangible assets, which increased, is already embedded in these numbers. So you see there -- a portion of that has to do with the higher productivity of the new direct selling model that we introduced, primarily to that, plus, some tight management of costs, right? So this is sort of a structural level we should be running at. Now as it comes to reinvesting, we have already been investing significantly to grow our market position in recent years. The market started the year quite flattish, so to say, and we increased competitive activity. Having said that, we do think that the current level of investment is enough for us to achieve our planned performance. But we're looking that very closely because I haven't seen so much competitive activity in many years, as we saw in Q1 this year .
Yes. It seems intense. And I think that Avon was indicating that they were down kind of mid to high single digits in Brazil across every CFT category. And I guess in that context, I was anticipating that maybe you'd have an opportunity to take a little bit of market share or a little bit more.
Sorry, Bob. Can you repeat the ending of the question, please?
I guess from your perspective, do see an opportunity because of maybe a position of weakness with your biggest direct selling competitor?
Right, because of their relatively poor results. Yes, but everyone else is very active. So as I mentioned, I have not seen so much activity in many, many years.
Next question, Marco Calvi, Itau BBA.
A question regarding the market share in Brazil. You guys showed some triggers during the Natura Day, showing an increase in market share in Brazil for most of the important -- I think important lines of products to Natura. My question is regarding what you guys have been seeing during 2018. Is that still happening? Have you guys been seeing an increase in market share gains in the most important line of products?
I cannot -- JP speaking. Thanks for the question. And unluckily, I cannot disclose and open all the market share most recently -- most recent market share numbers at this stage. Having said that, we are working to defend and continue gaining market share throughout these years, right? And so far, there's no reason for us to believe that we're not going to achieve that.
Next question, Tobias Stingelin, Crédit Suisse.
Just a question, JP, specifically in regards to the first quarter. There was still kind of a positive impact from the lower taxation on a year-over-year basis of about BRL 23 million, right, which was about 12% of EBITDA. This effect is kind of going to normalize in the second quarter of the year, right?
Which tax, Tobias?
Taxes, sorry. If I just look for -- if you look at your EBITDA breakdown, you basically mentioned that about BRL 23 million of the EBITDA growth is coming from lower taxes from carga tributária. This is basically because of the changes in the taxation that was implemented last year, right?
Yes, parts of that -- a significant portion, yes. And there are other taxes that we are pushing to optimize going forward. But yes, there is an effect in Q1 on that, yes.
Just -- I'm just wondering, looking to understand. Because if I'm not wrong, this effect will kind of normalize in the second quarter, right? My only concern here is that in the second quarter, you start off -- you have kind of comparables, which already include also the lower tax benefit. And though -- so you will not see this effect. I'm just trying to see if I'm wrong, if I'm right.
Don't expect any significant change in gross margin for that purpose, because there are so many other activities going on. Don't expect any change in -- any significant change in gross margin for that.
So there should continue to be kind of a positive impact going forward?
Yes. In second quarter, yes. Tobias, this is Marcel, sorry. If you are talking about the IPI, it started in the third quarter.
Okay. So still you have another quarter, which is benefiting. In the second half of the year, your top line will be -- will face tougher comps because of that.
That's it.
Okay, perfect. And just another question is that given that during the Investor Day, you mentioned that -- JP, you mentioned that the number of consultants were expected to stabilize as of now, more or less and given the strong increase in productivity so should we expect to see a major acceleration in top line in the second quarter?
What I can repeat is that we do expect the number of consultants to stabilize somewhere within Q2, towards the end of Q2. So it will -- if we manage to continue to deliver an increased productivity, that will reflect in top line. Let's see.
Okay. So the end of second quarter, perfect.
Next question, Alex Robarts, Citibank.
I wanted to start with, first of all, top line trends in Brazil and then, second, on the negative free cash flow here. When you look at the top line, I guess 1% sales growth, just about, have been -- adjusted for the Mother's Day effect, it was 3%. How -- could you give us a sense of how that top line was among your 3 categories? I know you've, in the past -- well, I guess at the end of last year, you were talking about indications of trading up in toiletries. And I was wondering if you had seen some trading up or if there were signs of trading up in the other 2 CFT categories and if you could perhaps comment generally on your demand environment. Do you feel like a recovery is firming up? Do you feel like we're still in transition? So that's the first question. Then I'll come back on free cash flow.
Alex, JP speaking. Well, as it comes to the demand, I cannot open by category at this stage. But on an aggregate level, we consider demand -- what we saw in Q1 is that the market has slowed down quite a lot, based on external figures. The market has slowed down quite a lot. So is that going to recover? Well, most likely in the second half. The -- our modeling of the market suggests that we'll recover a little bit towards the second half of the year, mainly driven by disposable income of families. So this is a variable we have to watch. If that doesn't happen, the market may remain a little bit flat. We'll see. But it started very slow.
Okay, interesting. And a follow-up on this. I know you guys kind of relaunched the 19th cycle, right, of the catalog. Is that -- I understand was part of -- the motivation is to kind of have and set up sales for January or at least stimulate some incremental sales in January. How did that 19th cycle work? Are you happy about the effects and impact? Did it have an influence on this first quarter sales?
No. We have cycles that we see higher activity in the channel, activity level in the channel. That's what drives us to increase number of cycles. It helped in Q4. And Q1, we basically did some short cycles to adjust the calendar of our activities to the sort of Gregorian calendar. So no special reason for driving that additional sales there. But you want -- I hope it helps. But you wanted to ask about the cash flow, isn't it?
Yes, that's right. And so we see this BRL 351 million negative free cash flow, and thanks for breaking it out among the segments. And I was just wondering if there was some color that you could give us around -- for The Body Shop, we saw BRL 125 million of cash burn, and then the BRL 165 million in Natura. How -- what do you think where the drivers behind this? I mean, I guess I'm specifically interested in the TBS outflow. Is -- are these movements with some of the accounts receivables? Is it some other element around investments? And could this level of outflow that we're seeing here for TBS and Natura continue for a quarter or 2 or not?
Alex, this is Marcel. So yes, regarding TBS, it's very seasonal. Indeed, this cash outflow is better than the previous year. So I think we are in a good trend. And regarding Natura, we have, I think, 3 main effects. One, is that we'll have a phasing, a different phasing than the previous year when you compare with this year. So the second quarter last year was, how can I say, not so strong, and I think we have different from the last year -- of this year. Besides that, you have the LatAm growth. I think part of this stock is to support the LatAm growth. And the last one is that, internally, we took some measures intentionally to increase our inventory level of some top-selling products in order to reduce the risk of stock-outs. So those effects are all of -- those effects are temporary, and in the remaining year, we are going to reduce the level of working capital in the 2 companies, TBS and Natura.
Our last question comes from Franco Abelardo, Morgan Stanley.
My question is for JP, related to the calendar impact in Brazil, related to the change in the Mother's Day campaign that you mentioned in the press release. Could you try to quantify the impact that you had in the first quarter related to that? Or maybe now that we are close to the Mother's Day, how much has been the growth, normalized growth, including the comparable calendar for the Mother's Day, of course, not in terms of numbers but at least directionally? Are the trends much better or worse or similar than the growth we saw in the second half last year in Brazil? That's my question.
Franco, no. One -- I think that one of the questions you asked, we have already provided some sort of answer. We said that, nominally, the Brazilian operation grew 0.8%, but adjusted for the calendar effect, we do [ had found ] 3%. So that -- you can quantify out of that how much actually shifted to Q2, right, just to take into account the calendar effect. As it comes to the underlying business this year, I mean, we are in a much better shape than we were early next -- last year. You followed up with us how the business has improved its health throughout last year, then we started to gain share and recover consultants' productivity. You may recall that Q2 last year was -- the moment was actually just before the moment we introduced the new relationship sales moment -- model. So we were leading the preparation stage for that and that we had to hold back a little bit because of that reason. So we're busier, in a healthy position.
That's clear. And the second question related to the stores' channel. You mentioned that you are preparing expansion to new states or new place, new locations in Brazil. Do you have any guidance in terms of how many stores and in which regions you can open the stores this year?
Well, I cannot give you the exact number. But if you have friends walking around shopping malls, you're going to see already in some of them, Natura's signs as we're refurbishing those stores. And not only in São Paulo and Rio, but also in Curitiba and going to central west of the country as well. So you will see a much higher activity from now till the end -- middle of the year.
As we still have some minutes, our next question comes from Olivia Petronilho, JPMorgan.
I have 2 questions actually. The first one is on the new channels. If you can talk a little bit about the developments on the stores and ongoing channel, more specifically, what you signed this quarter and what to expect for the year. And the second question is a little bit on Brazil's top line, going back to the subject. We continue to see the productivity of the sales representatives going up, but still top line is flattish. So just wanted to understand it from here onwards, you would like -- you wish to see top line growing coming from further productivity or if these sales representatives are still taking share of those that are already in the bases.
Olivia, João Paulo speaking. So as mentioned before, it is our intention to recover -- to continue to gain market share in Brazil. So we should grow above market. Certainly, it's not the nominal 0.8% of Q1 that we delivered that, but we are on track to gain market share once again. Productivity of consultants helped, and of course, as mentioned before, we do see a stabilization and modest growth of the channel going forward, which will help. And on top of that, the new channels, new for us, at least, play an important role, especially the online channel, which is almost doubling, year-on-year, and already represents 4% of sales in our Brazilian operation. So that will play an important role. And add to that the stores, but it's a much smaller base, although a much higher growth rate, but on a very small base.
This concludes today's question-and-answer session. I'd like to invite Mr. Roberto de Marques to proceed with his closing statement. Please go ahead, sir.
Thank you, Natalie. And again, I'd like to thank you all for participating in this call and look forward to our future exchanges.
Let me also remind you that we recently announced that José Filippo will be joining us later this month at the Group, a Natura CFO, and he'll be with us on the next call on August 10. I also want to take this opportunity to thank Marcel Goya for helping us throughout this transition.
So thank you, everybody, and have a great weekend. Thank you.
That concludes the Natura Audio Conference for today. Thank you very much for your participation. Have a good day.