NATURA &CO HOLDING S.A. Official Letter No. 376/2015/CVM/SEP/GEA-2
Rio de Janeiro, November 19th, 2015.
To Mr.
José Roberto Lettiere
Director of Investor Relations of NATURA COSMÉTICOS S.A.
Av. Alexandre Colares, 1.188- Vila Jaguara - São Paulo 05106-0000 - SP
Phone: (11) 4571-6000
E-mail: fabiocefaly@natura.net
Matter: Request for clarification
Mister Director,
"Natura announced this Thursday (19) that it decided to open its first line of physical stores. According to the cosmetics manufacturer, the first units of the brand in traditional retail will be inaugurated in 2016 "in large malls".
The new strategy happens amidst the advance of other brands in the Market of direct sales and resistance by the public to the model of catalog sales. The transformation of Natura in a multichannel company was a market demand, but Natura always avoided creating conflicts with its network of over 1.3 million consultants in the country.
"We are confident that new opportunities to buy Natura products in multiple channels will strengthen even more direct sales, in a beneficial movement for all our relationship network, of the supplier communities of assets of social-biodiversity to our consultants, consumers and employees", said the company, in a communication.
Natura did not inform the number of planned openings for 2016. In a report to customers, BTG Pactual projected the opening of 10 stores next year, as of April, with an investment of R$3 million per unit.
"The company currently performs a test to choose the architecture proposal and services that better represent our brand. After the test period with customers, the first physical stores of the brand will be inaugurated in 2016, in large malls", affirmed Natura.
Natura ended the third quarter with a profit of R$ 131.8, a fall of 38.6% in the net profit in the annual comparison. In the accumulated in 9 months, the company accumulates net profit of R$ 368.1 million, a retreat of 27.5% as compared to the same period last year.
In the balance sheet of 2014, Natura informed having ended last year with a fall of 13% in the net profit and the loss of 1 percentage point in its market share.
For the analysts of BTG, the Natura stores will count on a differentiated environment and levels of service of excellent quality, having as target the young public of the upper class and upper middle class, in order to increase desire for the brand."
2. In this connection, we require your pronouncement about the veracity of the statements aired in the news and, in affirmative case, we request your pronouncement about the measures being taken by the Company in this regard, as well as the reason why the issue was not taken as Material Fact, pursuant to Instruction CVM No. 358/02.
3. Such pronouncement must include a copy of this Official Letter and be sent to the IPE System, category "Notice to the Market", type "Clarifications about CVM/BOVESPA consultations".We highlight that, pursuant to article 3rd of CMV Instruction No. 358/02, it is up to the Director of Investor Relations to disclose and report to CVM and, if applicable, to the stock exchange and market entity of organized over-the-counter market in which the securities issued by the company are admitted to negotiation, any relevant act or fact occurred or related to its businesses, as well as to care for its wide and immediate dissemination, simultaneously in all markets where such securities are admitted to negotiation. We further remind about the obligation provided for in sole paragraph of article 4th of CVM Instruction No. 358/02, to inquire managers and controlling shareholders of the Company, aiming to ascertain if they were aware of the information that should be disclosed to the market.
From the order of the Superintendence of Relations with Companies - SEP, we warn that this administrative authority, in the use of its legal attributions and, based on item II, of article 9th, of Law No. 6385/1976, and in article 7th coupled with article 9th of CVM Instruction No. 452/2007, determine the application of a comminatory penalty, in the amount of R$ 1,000.00 (one thousand reais), without prejudice to other administrative sanctions, for the non-compliance of the present official letter, now also sent by e-mail, within the term of 1 (one) working day.
Sincerely,
GUILHERME ROCHA LOPES
Manager of Monitoring of Companies 2
To
Securities and Exchange Commission
Through Empresas.NET system
C/O: Management of Monitoring of Companies 2São Paulo, November 23trd, 2015.
Re: Official Letter No. 376/2015/CVM/SEP/GEA-2
Dear Sirs,
Natura Cosméticos S.A. ("Company"), in reply to Official Letter No. 376/2015/CVM/SEP/GEA-2 of November 19th, 2015 ("Official Letter"), hereby exposes as follows about its strategy of expansion of marketing channels of products:
The Company has been developing a set of projects aiming at the continuous improvement of the positioning of our brand in the cosmetic market, seeing the constant consumer preference. Among these projects are those related to the improvement of our traditional sales channel - direct sale - as well as initiatives in other channels, dealt with below.
Over the last years, the Company has been improving a sales model of our products through an electronic platform, an internet website, the Rede Natura, which allowed the interaction of the Company's network of consultants with a greater number of consumers and the expansion of our area of action. The Project initiated as a pilot in November 2012, in Campinas, having then been launched a new format in São José dos Campos, in October 2013. In mid-2014, after the testing phase, we started the expansion of this model for the State of São Paulo. On that occasion, we felt that it was the moment to report to the market about the expansion of
the Project, which we did through Notice to the market dated July 7th, 2014. The success of this program may be measured by the number of five hundred thousand of registered consumers since its launching.
Following this trend, since April 2014, the Company has a project of expansion of sales channels with the installation of kiosks for the sale of our products in malls of Campinas and São José dos Campos, in the State of São Paulo, in an action that aims to test the appetite of consumers, with the sale and launching of products and distribution of samples, among other activities. This initiative is stressed out in the Company's annual report of 2014.
The Company also tried, in a mix of expansion of channels, the construction of a concept store in the capital of the State of São Paulo for a short period of time, in the year 2012. In this line, also in the months of June, July and August 2015, the Company installed in a seasonal mall in Campos do Jordão, a seventy square meter store to receive the winter season attendees of this touristic place of the State of São Paulo.
Further dealing with the modernization of the direct sales system, the Company also launched, during this year, the "Você Conecta" [You Connect] Project, a program that has the scope to monitor the technological development that the consumer demands, giving the consultant the possibility of receiving the sales amounts through the payment by credit card, aligned to a program of order capture by cell phone, which was evidenced by the change of
the corporate purpose of the Company promoted in our General Ordinary and Extraordinary Meeting held on April 14th, 2015.
Still this year, the Company, with the Vitrine [showcase] Project, aligned with large consultants who resell our products (as well as products of some of our competitors) in own Points of Sale (POS), sought to reformulate the availability of Natura products in a more structured layout in such POS, thereby resulting in an increase of productivity of 15% and 4.4 percentage points of share. This initiative is being commented in our result calls and is emphasized in two presentations of the Company available on the Investors Relations Website.
Also, throughout this year, we executed an agreement with Raia Drogasil S.A. ("Raia") for the attainment of the SOU line, a sub-brand of Natura, in the Raia drugstores in some countryside cities of the State of São Paulo, in another project related to the evolution of our commercial model. The issue was highlighted in our Earnings Release of the third quarter of 2015.
Regarding our international expansion, besides a well-structured process with presence in Argentina, Mexico, Peru, Colombia and Chile, the Company maintains, since 2005, a direct sales channel with a network of 1313 consultants and a store in Paris, an initiative that is undergoing a reformulation process to meet the demands of the local consumer. We are also dealing with the construction of a test store in New York, USA.
As seen, the initiative evidenced in the article stressed out in the Official Letter is part of a continuing program and widely disseminated to the market, of expansion of the Company's way to do business, a company that continues to carry out its sales substantially through the direct sales channel.
The specific information about the opening of physical stores by the Company is however, already being presented to the market for a few quarters. It was also the topic of questions and answers in the Company's last result conferences denoting the transparency of the projects of exploitation of other forms of marketing of our products.
In view of the foregoing, the information about the opening of physical stores by the Company, per se, may not be considered relevant, neither new, since it is part of a Project already known by the market and inserted in a context of several ongoing initiatives. Furthermore, we are still in the phase of testing the model and understanding its relevance for the Company. Exactly as we did for Rede Natura [Natura Network], as soon as the Company understands that this model becomes relevant, we will communicate the expansion of the Project to the market.
In the meantime, we will continue to seek innovation of our model, primarily in the direct sales channel, but also in the several channels to which we have access. So much so that at the occasion of the disclosure of the explanatory notes regarding the 2nd Quarter of the year 2015, the Company had already made it clear, in a press release disclosed to the market, the maintenance of the projection of the investment in Capex, focused on Innovation and in the evolution of our business model.
We remain at your disposal for any further clarifications.
Sincerely,
JOSE ROBERTO LETTIERE
C.F.O and Director of Investor Relations
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