Good morning, ladies and gentlemen, and thank you for waiting. At this time, we would like to welcome everyone to Natura &Co.'s second quarter 2020 results. Today with us, we have Roberto Marques, Group CEO and Executive Chairman of the Board of Natura &Co., Mr. José Filippo, CFO of Natura &Co., Mr. João Paulo Ferreira, CEO of Natura &Co. Latin America, and Ms. Viviane Behar, Investor Relations Officer of Natura &Co. This event is being recorded. All participants will be in listen-only mode during the company's presentation. After Natura &Co.'s remarks are completed, there will be a question and answer session. At that time, further instructions will be given. We have simultaneous translation into Portuguese. Questions may be asked normally by participants connected from abroad, either in English or Portuguese. We have a simultaneous webcast that may be accessed through Natura &Co.'s IR website, investor/naturaeco.com.
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. This presentation may contain forward-looking statements. Such statements are not statements of historical fact and reflect the beliefs and expectation of Natura &Co management. Forward-looking statements speak only as of the date they are made, and the company does not undertake any obligation to update them in light of new information or future developments. This presentation also includes adjusted information prepared by the company for information and reference purposes only, which have not been audited. Now, I will turn the conference over to Mrs. Viviane Behar, Investor Relations Officer of Natura &Co. Ms. Behar, you may begin. The floor is yours.
Good morning or good afternoon to everyone. I'm Viviane Behar, Natura &Co.'s Investor Relations Officer. I hope you're all well. Thank you for joining us today in these still unusual times for this call to present Natura &Co.'s second quarter 2020 earnings. I'm joined today by Roberto Marques, Executive Chairman and CEO of Natura &Co., José Filippo, CFO of Natura &Co., as well as João Paulo Ferreira, CEO of Natura &Co. Latin America, who will join us for the Q&A session. Our investor relations team of Natura &Co. is also with us. This presentation we will be referring to during the call is available on the Natura &Co. investor relations website. Roberto will start with an overview of our performance.
Filippo will detail our financials for Natura &Co, and after that, Roberto will make concluding remarks, and we will open the floor to your questions. Let me now hand over to Roberto. Roberto, please.
Thank you, Viviane, and hello, everyone. Thank you for joining us. I hope all of you are safe and well in these still challenging times. Let me begin on slide three with the highlights of our performance in an unprecedented and yet very active quarter for us. Overall, this second quarter demonstrated the resilience of our business and the strength of our omni-channel and global footprint model. In the face of a continuing global pandemic, the peak of lockdown in many geographies, with many lives sadly lost and livelihoods impacted, we were extremely proud and pleased how our associates globally, partners, and our entire network performed, exceeding our expectations in terms of results. First, from a sales standpoint, our overall results outperformed both the global and Brazil CFT markets. Second, we contained the sales drop to 12.7% in the quarter.
Our adjusted EBITDA margin stood at 8.8% on improved gross margin and cost discipline, particularly in Q2, to mitigate COVID-19 impacts on revenue. Third, we strengthened our capital structure and cash position, finishing with a strong over BRL 7 billion in cash by the end of the quarter. We also successfully completed a private capital raise of BRL 2 billion, subscribed by our own controlling investors and existing shareholders. The proceeds allow us to de-leverage the company faster, strengthen our balance sheet, and to build on our digital momentum. The strength of the quarter was due to the remarkable acceleration in our digital transformation. We pivoted rapidly to online channels as lockdown measures hit stores and impacted consumer, consultants, and representatives' mobility. In the quarter, our group-wide e-commerce sales rose by a very strong 225%. Adoption of digital tools across the group also grew significantly.
A particular call-out to the Natura brand, which posted remarkable growth in Brazil, and to The Body Shop and Aesop, which successfully managed to largely offset the impact of store closures. A quick switch to online and digital results in online growth at Aesop of 430%, and also a very strong growth in The Body Shop's e-commerce and at-home channel of almost 300% combined. We also saw rapid growth in e-brochure sales at Avon brand in Q2. To help fuel this transformation, we plan to continue stepping up our digital and IT investment with an outlay now of BRL 400 million over the coming six months, in line with our CapEx budget, while we're still planning for significant ongoing investments over the coming years. We continue to make progress on the Avon integration and synergies.
In this second quarter, we delivered BRL 25 million in cost savings, mainly in procurement, which was ahead of the estimate in the quarter. We are on track to deliver our full year synergy commitments. As also disclosed early in the quarter, Avon was impacted by a cyber incident that interrupted some systems and partially affected operations during the last weeks of the quarter. This has created a phasing impact on sales of about BRL 450 million on a consolidated base, which were already captured in Q3. Excluding this phasing impact, the quarter would have posted a decline of only 7% versus prior year. We also took a number of strategic actions in the quarter to strengthen our business for the future. Let me start with a partnership between Natura Brand and Singu, a leading Brazilian digital platform for at-home beauty services.
We believe that the combined strength of the two companies can provide thousands of beauty professional consultants with the opportunity to drive higher income by offering their service through the Singu platform. We signed a partnership with VaynerMedia, a global powerhouse in social media, which will include support for the relaunch of the Avon brand that is planned for a rollout starting in Q3 of this year, with focus on digital and content creation, using also of our own network of representatives. In line with our strategic priorities to expand our geographic footprint, The Body Shop has signed an agreement to acquire its Japan business from its head franchisee, a transaction that is expected to close in October of this year. During this quarter, The Body Shop also launched its successful at-home direct selling channel in the U.S., having signed to date over 3,000 consultants.
Finally, in June, we launched our ambitious 2030 sustainability vision, Our Commitment to Life, that amplifies our belief and goals to be an all-encompassing business model that aims to create a positive impact in society and to help build a more sustainable economy. Natura &Co's Commitment to Life sets out a 10-year plan to tackle some of the world's most pressing issues, including addressing the climate crisis and protecting the Amazon, defending human rights, ensuring equality and inclusion, and embracing circularity in generation in our products and packaging. Today, more than ever, Natura &Co is committed to prioritizing a combined economic, social, and environmental performance. Let me now hand over to Filippo to go into our financials in greater detail.
Thank you, Roberto, and hello to everyone. Before going into our financials, let me remind you of the adjustments that impact our numbers, as shown in slide five. Throughout this presentation, we will refer to adjusted EBITDA, and this slide describes the principal adjustments that we applied to our reported figures to allow better understanding of our underlying performance. These include transformation and acquisition costs and certain tax credits and reversals of both Natura and Avon Brazil. That said, let's now look at our Q2 performance. As mentioned, we managed to largely offset the impact from the COVID-19 pandemic on stores and traffic with a rapid move to online and the gradual reopening of retail stores. Natura &Co posted a record acceleration in digital social selling in the quarter, with group online sales growing nearly 225%. On slide six, we show you a few highlights by brand.
Online sales rose almost 150% at Natura enabled brands. At Natura, content sharing grew by more than 70%. The number of orders through consultant stores tripled versus last year. At Avon International, e-brochure sales tripled. At The Body Shop, e-commerce sales grew by more than 230%, and at home increased by more than 280%. Finally, online sales grew by more than 430% at Aesop. On slide seven, our consolidated net sales in the quarter were down 12.7% in real and 23.5% in constant currency to over BRL 6.9 billion. This constitutes a very resilient performance, reflecting the strength of our omni-channel and social selling model. This performance was driven by remarkable growth of the Natura brand in Brazil, a very strong performance by The Body Shop and Aesop, and was also helped by our geographical diversification.
These effects allowed us to significantly offset impacts from COVID-19 and the previously announced cyber incident at Avon, which shifts approximately BRL 450 million in sales to Q3. Excluding the phasing effect of the cyber incident on sales, net revenue in Q2 would have been down by 7% versus Q2 2019 and 18.6% at constant currency. In the first half, sales were BRL 14.5 billion, a drop of only 5.7% year-over-year, with strong growth in real of both The Body Shop and Aesop at 9% and 30.8% respectively. On slide eight, you'll see that consolidated adjusted EBITDA stood at BRL 615.2 million, which excludes non-recurring Avon acquisition and transformation costs of BRL 60.2 million and BRL 96 million for tax credits, recoveries, and provision reversals in Brazil. While adjusted EBITDA is down year-over-year, this marks a sequential improvement over the BRL 571.5 million recorded in Q1.
The drop in adjusted EBITDA is largely due to lower EBITDA resulting from lower sales at Natura &Co LatAm and Avon International due to the pandemic context, mitigated by strict cost discipline across the brands, particularly in Q2, to mitigate COVID-19 impacts on revenue. Adjusted EBITDA margin in the quarter was 8.8%, down 450 basis points. In the first half, adjusted EBITDA margin was down 340 basis points to 8.2%. On a reported basis, EBITDA was BRL 651.9 million in Q2, with margin of 9.3%, down 160 basis points. Turning to slide nine, we look at Natura &Co's underlying net income. In Q2, it stood at a negative BRL 213.8 million. This excludes BRL 174.7 million in transformation costs and Avon acquisition effect.
This reflects mainly COVID-19 impact on EBITDA and higher depreciation of BRL 156 million, which were partially offset by improvements in financial expenses for BRL 15.8 million and the income tax for BRL 57 million. On a reported basis, we recorded a net loss of BRL 388.5 million in the quarter. On slide 10, we look at our balance sheet items and capital structure. We have a very strong cash position with BRL 7.4 billion in cash at the end of the quarter. Our debt maturities this year stand at only BRL 1.4 billion, and our overall average maturity is 3.8 years. Cash flow in the quarter was an outflow of BRL 96.1 million versus an inflow of BRL 63.6 million in Q2 2019.
This is consistent with seasonality and also reflects other factors including COVID-19 impact on revenue, foreign exchange effects in working capital, and extended payment terms for consultants and reps. This was partially offset by extended payables. We strengthened our capital structure in the quarter with the successful completion of a BRL 2 billion capital increase, which contributed to deleveraging, as shown in the next slide. We are committing up to BRL 400 million in investment over the coming six months, in line with our CapEx budget and continuing significant investments over the coming years. This will help upgrade Avon platforms, accelerate the LatAm integration, and advance digital transformation across all of our business. On slide 11, starting with Natura Cosméticos, the leverage improved in Q2 to 2.04x , excluding IFRS 16, compared to 2.83x in Q2 2019, and was well under the June 30th covenant ratio of 2.25x .
At Natura &Co holding level, including the effects of IFRS 16, consolidated net debt to EBITDA stood at 3.63x . With total net debt of BRL 10.6 billion. On slide 13, we have the key highlights of Natura &Co LatAm, which encompasses our four brands in the region, Avon, Natura, The Body Shop, and Aesop. For comparison purpose, we adjusted 2019 results to include Avon. Total net sales were down 16.5% to BRL 3.97 billion in Q2. In the very challenging context, Natura brand posted total growth of 4.4% in real and 2.6% in constant currency, driven by a remarkable performance in Brazil, where it gained market share. Avon was impacted by COVID-19 and the cyber incident, when sales were down 35.2% in real and 40.2% in constant currency. In the first half, total net sales were down 7.8% in real and 11.3% in constant currency.
On slide 14, we look at Natura brand. Sales at Natura brand in Brazil rose 7.9% in Q2, which represents an exceptional performance in the circumstances. We saw a steady progression in sales throughout the quarter, ending with strong growth in June of 29.4%. This demonstrates the success of our relationship selling model, which led to the 15th consecutive quarter of high productivity in Brazil, up by a strong 6.9%. The number of consultants at the end of the quarter was up 5.6% versus Q2 2018. Digital played a critical role in the current context. The number of Natura consultants trained on digital tools has tripled in relation to the pre-COVID-19, and there has been a continuous increase in usage and penetration. Over 90% of consultants use digital platform. At the end of Q2, there were almost 900,000 Natura consultants' online stores, 65% more than Q2 2019.
The implementation of new features, such as interactive e-brochure, has allowed us to significantly grow sales through the digital platform. In the retail channels, all brands across the region were impacted by lockdown restrictions. By mid-July, approximately 70% of our retail stores were reopened, mostly with restrictions. At the Natura brand in Hispanic Latin America, Q2 net sales were down 3.6% in real and 10.2% at constant currency. This is mainly due to strict COVID-19 lockdowns in markets such Argentina, Peru, and Colombia in April and May. However, in June, the region resumed growth. The average number of consultants increased by 9.8% versus Q2 2019 to 714,000. In the first half, sales were up 8.7% in Brazil and 9.6% in Hispanic LatAm, or 3.6% at constant currency. Turning to Avon on slide 15.
The Avon brand revenue in Brazil declined by 31.1% in Q2, impacted by lower representative activity due to COVID-19 and the cyber incident, which had a favorable phasing effect on Q3 sales in Brazil of approximately BRL 180 million . The average number of representatives decreased 5.1%. In Hispanic LatAm, the Avon brand posted revenue decline of 37.8% in Q2 2020 in real, with 46.2% at constant currency. This is due to the effect of hard lockdown in the region and a 21.5% reduction in average number of representatives. The cyber incident shift approximately BRL 210 million to Q3, the overall effect of Natura &Co is about BRL 390 million in sales [audio distortion]. The beauty saw good advances in digitalization despite a challenging environment, and we saw an increase in the satisfaction index of representatives for the first time in six years.
In the first half, sales at Avon Brazil were down 18.3%, and in Hispanic LatAm, they were down 23.9%, or 31.9% at constant currency. Adjusted EBITDA for Natura &Co LatAm on slide 16, were BRL 373.2 million in Q2. Adjusted EBITDA margin was down 320 basis points to 9.4%. The Natura brand posted a 660 basis points increase in adjusted EBITDA margin, supported by higher margin on both Natura Brazil and Hispanic LatAm, driven by growth in revenues and measures implemented to reduce discretionary spend, notably in the second quarter, to mitigate COVID-19's impact. This was offset by a decrease at the Avon brand, mainly from lower revenues, causing significant deleverage of fixed expenses, particularly in Hispanic LatAm. In the first half, adjusted EBITDA was BRL 660.9 million, down 23%, with margin down 160 basis points to 8.1%. Let's now move to Avon International on slide 18.
Net revenue declined 21.6% in Q2 2020, and 38.9% at constant currency, mainly impacted by a 36% reduction in active representatives due to COVID-19 and the cyber incident later in the quarter. The cyber incident shift approximately BRL 60 million of sales to Q3. Units sold declined 34%. Digitalization of representatives continued throughout the quarter. They were equipped with the new digital capability, including easier digital brochure ordering and the ability to ship directly to consumer, allowing representatives to fulfill orders despite lockdown. Q2 2020, Avon International sales via digital brochure more than tripled versus Q2 2019, and e-commerce sales more than doubled. The first half revenues was down 11.9% or 26.6% in constant currency. Avon International adjusted EBITDA in Q2 was BRL 72.6 million with margin of 4.4%, down 950 basis points, impacted by lower revenues due to the COVID-19 and the cyber incident, resulting in operational deleverage.
In the first half, adjusted EBITDA was BRL 175.4 million, and adjusted EBITDA margin was 4.7%, down 840 basis points. We now move on to The Body Shop on page 20. Net revenue in real increased by 15.5% in Q2 to BRL 979 million and was down by 13.2% at constant currency. The decline in constant currency was primarily due to lockdown restrictions, combined with the permanent closure of 25 owned stores on a net basis in the last 15 months as part of the store footprint optimization plan. At the end of April, 87% of retail stores were closed due to lockdown measures. Revenue progressively improved as stores reopened, reverting to strong growth of 14% in June, with only 16% of the stores closed.
The Body Shop offset about 90% of the COVID impact, thanks to the gradual reopening of stores and e-commerce growth of more than 230%, while at-home sales increased by more than 280%. Growth in these channels was supported by a new distribution center in the U.K. and opened in record time in April to meet the demand surge. The first franchisee new concept store was launched in South Korea in the quarter. In addition to the three previously launched owned concept stores in London, Hong Kong and the U.K. The quarter ended with 973 owned stores and 1,746 franchise stores. Adjusted EBITDA in Q2 reached BRL 145.2 million, up 9.4% with margin of 14.8%, down 90 basis points on an adjusted basis, but up 140 basis points on a reported basis.
The adjusted margin decline was due to revenue reduction from store closing and lockdown measures, partially offset by lower discount, strict cost measures and COVID-19 related government subsidies, particularly in Q2. On slide 22, Aesop's success story continued with strong double-digit growth in both revenue and profitability in Q2 in real. Net revenue grew by 34.8% and was broadly stable at constant currency. Store closures early in the quarter, reaching about 90%, were offset by remarkable growth of 430% in digital sales and the gradual reopening of stores. June growth reached 20%. Aesop took quick action to convert several stores into fulfillment centers to meet the increased e-commerce demand. As of mid-July, 75% of the store network has reopened, mostly with restrictions in place. In the first half, net revenue was up by 30.8% in real and up 4.9% at constant currency.
Profitability also grew in strong double digits in real, with EBITDA reaching BRL 102.6 million with margin of 26.8%, up 650 basis points. This growth was driven by target cost reduction, favorable channel mix, and utilization of government subsidy programs in the quarter, which helped to mitigate COVID-19 impact on revenue. In the first half, EBITDA was up 52.8% with margin of 25%, up 360 basis points. Signature stores totaled 247 in the quarter, up 11 over the past 12 months and stable in the year as no new stores were launched. Let me now hand back to Roberto.
Thank you, Filippo. Let me now conclude on slide 24 with the key takeaways. Let me mention four of them. First of all, Natura &Co omnichannel model has shown its resilience amid the COVID-19 crisis, with strong growth in digital social selling and e-commerce, and a gradual return to revenue growth as the store reopened and mobility increased. The Natura brand posted remarkable growth in the quarter, and The Body Shop and Aesop also managed to largely offset store closures. Second, with a record increase in online sales in Q2, we demonstrated our digital transformation is a reality, and we are planning further investments to build on that momentum over BRL 400 million in the coming six months. Guaranteeing the best experience for our clients and make the online channel available to all of our consultants and representatives network. Third, we have optimized our capital structure.
With the successful capital raise of BRL 2 billion, we also continue to deleverage our balance sheet faster than actually we even anticipated. Fourth, we have made advance in our sustainable growth strategy with, on one hand, the unveiling of our ambitious new target as part of our 2030 vision Commitment to Life. On the other hand, a number of moves to bolster growth and expand our footprint, including strategic partnerships such as Singu and VaynerMedia, The Body Shop acquisition of its franchisee business in Japan, and move in at-home direct selling in the U.S., which will contribute to long-term top-line growth and geographic footprint expansion in strategic markets such as Asia and North America. Continue advances on the Avon integration, which is so critical for us with synergies on track.
I would like to conclude by expressing, once again, my gratitude to the teams across our group, whose incredible energy, passion, dedication, and focus really enable this performance. Thank you very much for your attention. We are now going to open the Q&A session, and Filippo, JP, and I are happy to take your question. The floor is now yours.
We have a question from Thiago Macruz from Itaú BBA.
Hi, guys. Good morning. My first question is to Roberto. Roberto, tough times like the one that we're living today, they bring several challenges, some companies are basically forced to adapt very quickly. We've seen very good news in this quarter in terms of gross margin in OpEx for more than one brand of your group. Do you think that some of these novelties could be sticky? Can you, because of the learnings of the last five months, emerge from this crisis a more streamlined, a more efficient company? Then my second question is to JP. I just want to try to understand Natura's brand growth in Brazil, which was impressive. What do you think differentiated yourself from the competition during this period to help you sustain such an impressive growth? These are my two questions, guys. Thank you.
Thank you, Thiago. I'll start, then I'll ask JP to talk about the remarkable result of Natura Brazil, which is really amazing. In terms of some of those things, I would say partially it is, partially might not be. Right? The things that might stick are some of the more disciplined approach. As you know, we are also doing a transformation, we'll continue to do that in terms of our overall structure. Those things will have a more long-lasting benefit. I also think that we needed to realize that this quarter also, we reduced a lot of the spending, discretionary spending, and we also benefit for some of the government subsidies, right, which are not going to be sustainable.
I think I would probably say there is a part of that will be more sustainable, and there are part of that that are probably more one-off, because of some of the actions, to again, help us navigate through the crisis and also realizing some of the benefits that came from some of the government subsidies. JP, do you want to talk about Brazil and Natura?
Yes, Roberto. Thank you for the question, Thiago. Before I talk about this one, I just want to remind you all that Natura Brazil was already tracking very good results in Q1. It grew almost 10% in spite of half the month of March when the pandemic started. The reason for that good performance, which was carried over to Q2, have to do with the structural improvements and developments that we have been doing over many years. Strengthening the brand. The brand, it's in extremely good shape. You may have seen that during the pandemic, the Natura brand in Brazil was one of the top five most relevant brands according to consumers, right? There's, of course, all the omnichannel approach that we have been developing, turning actually consultants into an omnichannel point of sale, if you want.
There is the digitalization, of course, and it was only in Q3 last year that we fully merged on and off commercial models in Brazil. That started to accelerate after Q4 and then Q1. When the pandemic arrived, the adoption of the digital tools to complement the beauty consulting activity was already pretty high, although the maturity was not that high. Pushed by the circumstances, our consultant network adopted more sophisticated features. You see now that we have, across the region, almost a million online stores. Consultants are sharing content in multiple formats and actually is a sort of a content commerce, because as they share the content, that allows their customers to order products through the social networks as well, in addition to the online stores and so on.
The recruitment of new consultants, which is now almost fully online, removed entry barriers into this network. Overall, that created a huge flexibility for consultants to operate. Also, many of them found more opportunities to provide for their families through this activity in this period, and service their customers in a differentiated way. Right now, people talk about fair commerce, so you cannot think of anything fairer than that. Safe. You have the products arriving to your house. Trustful, in addition to convenient. All of that together allowed us to operate differently, adapt offerings on a daily basis. Regardless of what had already been printed in the brochures, we could use digital to customize, individualize, change according to the circumstances. I think that all those muscles built in the past, were put to work during the pandemic, Thiago.
Thanks. Thank you very much, JP and Roberto, and congratulations on a very good quarter.
Thank you, Thiago.
Our next question comes from Bob Ford from Bank of America.
Hey, good morning, Roberto, JP, and Filippo. I too would like to congratulate you on the strong performances and digitalization improvements of your integrated brands, especially the growth at Natura Brazil. That said, if we were to be a little bit more skeptical, I think that the skeptics would continue to point to the declines at Avon. JP, how can you be sure that the growth of Natura Brazil isn't in part due to a market share shift from Avon? Roberto, can you comment on Avon's brand health indicators more globally, anything in addition to the cyber event that might explain the decline in Avon reps, whether it's internal or otherwise? How this cyber event will impact the pace of systems changes and integration at Avon.
Hey, Bob, let me start, then I'll turn to JP to talk specifically about Brazil. I actually think that we are very bullish on Avon. I'll get a little bit on the cyber incident that had an impact especially on Q2. If we look at two aspects, Bob. One is also the significantly exponential growth of their digitalization and adoption of a social selling platform. Just as a reference, Avon International moved from e-commerce percentage of sales being about 1% last year to now over 4% of the entire business in e-commerce. E-brochure sales grew about 100% as an Avon brand compared to Q1 of this year and 200% compared to Q2 of 2019. Clearly, we are seeing also a change, of course, coming from a different place than Natura is.
Again, we're really trying to catch up and get all the learnings from Natura to accelerate that. The other thing that we are seeing, Bob, in markets that we are really now becoming much more bullish is like U.K. We actually double in this quarter the number of appointments or new reps coming to Avon. This is a factor of two things. One, I think we are paying much more attention to the relationship with the reps. Number two, I think it's fair to say that with increase on unemployment, the possibility of social selling becomes also a source of income for a lot of people. We are seeing, not only in U.K., but in many markets across the globe, an increase in terms of appointment and recruitment.
We see that as part of the journey, and in fact, I think we are even more bullish than before. A lot of the things that we are planning to do with Avon, we haven't implemented yet, right? Either because, again, let's not forget, we acquired the business in January, then in February, March, we are dealing with the biggest pandemic, the biggest challenge that we've seen in our generation. Then on the last part of the quarter, we had the cyber incident that shut down a lot of servers, primarily on our ability to ship product, to fill the orders. The representatives are still putting orders in the system, we couldn't actually ship. That's why you see the shift of BRL 450 million, that it's already being captured and it's already being invoiced, but actually end up happening in Q3.
Of course, this created a little bit of a challenge for us, but I think the team did a phenomenal job in being in front of that, communicating with the reps, reengaging the reps. We think that this is being resolved. Again, we're going to capture these BRL 450 million in Q3 already. The last thing that I would say regarding Avon, Bob, which is also we are super excited, is about the relaunch of the brand. You heard about JP talking about how important is the strength of the Natura brand. We want to also develop an Avon brand that is very up to date, that is relevant, that has a message that brings, again, what Avon really stands for.
We are super excited about starting this rollout of this new brand campaign in Q3 of this year. We'll continue through first half of next year, especially in LatAm. JP, do you want to comment specific about Avon Brazil and some of the learnings?
Sure. Hi, Bob. The group, the combination of all brands, we did gain share in Q2 in Brazil. As regards Avon, we came from a declining trend prior to the pandemic and ex cyber incident. That is the sort of the underlying trend. As Roberto mentioned, we already have put in place the turnaround plan. It is on track, fully resourced, and I'm very confident on the outcomes of this turnaround plan across the region. Some of the quick wins, which we implemented late in Q1, are being implemented as we speak. I do expect positive signs of improvement as of Q3 and mainly in Q4 already. Yes, indeed, it is still in an underlying declining trend, but I'm very confident that will be reverted very soon.
The last part of the question is how those cyber events impacts the pace of systems changes and integration, if at all.
It didn't, Bob. It was for a short period of time, call it, two and a half weeks to three weeks. The plans still are the same. I think it's fair to say that the investment that we are communicating to the market, the BRL 400 million, it is something that is going to help us and accelerate the digitalization across the board, including Avon, to accelerate even further the development of new applicatives and apps for Natura and Avon, and also to help us with the integration, right, especially in Latin America.
We didn't have any impact, significant ones, and we are on track, and actually now, I believe we're going to even accelerate this journey on digitalization and IT because of our strong position from a cash flow perspective, not just because of the capitalization, but because I think the team did a remarkable job in really containing costs and managing cash that we finish the quarter with over BRL 7 billion in cash. We now are in a very strong position to actually accelerate the investment and continue to build on that momentum.
That's very helpful. Thank you both very much.
Thank you, Bob.
Thank you. Our next question comes from Tobias Stingelin from Citi.
Yes, thank you so much. Congratulations. A very quick question, I think to João, again, just on this Avon issue. When you included in your press release and in your presentation, you have kind of a curve showing how Natura's brand in Brazil kind of accelerated during the quarter. Can you maybe give us a sense about how Avon was doing or how Avon kind of started the quarter and ended the quarter? I know that we have kind of this cyber attack, but if you maybe can just give us a sense about how the underlying trends of the business are. I think you kind of guided already that you expect improvement going forward. Would you expect by the end of the year, like December or something like that, the brand be growing already? Thank you.
Can I take that?
Yeah, João. Yes, please.
Hey, Tobias. The Avon brand in Brazil followed a similar trend, at different levels of course, but it ended the quarter ex cyber incident, much closer to flat against previous year in the last month of the quarter. It is showing, just to tell you that it is showing an improving trend already.
Perfect. Let's say by July ex cyber attack, sales of the Avon brand on a year-over-year basis is kind of flat.
Flattish. Right. We really don't know precisely because of the cyber incident, but it was already showing a significant improvement.
Great. In Latin America, if we exclude Brazil, has been the trend kind of similar? Is this something that you can share with us as well about how the brand, the performance has been there?
In Latin America, the Natura brand showed a very similar performance, improving towards the end of the quarter. The Avon as well, but it's many more countries there, so there's still a significant dispersion in terms of the performance. We are now pushing all those countries to align in the practices. It's a little bit behind the Brazilian improvement plan, but it's catching up.
Okay.
[crosstalk]
Sorry.
Just one thing, Tobias, also to say that I think is relevant, that we are seeing primarily in Brazil, but I would say across all markets also, the Avon brand is strengthening as a brand. That is also probably an attribute to maybe now part of the group, maybe because Avon has always been an iconic brand that has stood for relevant causes. In a moment of crisis, those brands, iconic brands, tend to perform better than brands that actually do not have so much a clear position and a purpose and a reason for being. That's second reason. Third reason, Avon also is a very democratic brand. It's probably the most democratic brand, offering high quality at a more affordable price. In terms of crisis, we know that consumers also tend to trade down. Avon also can benefit from there.
There are a lot of reasons also, on top of what João already explained, in terms of the turnaround, the commercial model, the digitalization that I think also are, I would say, tailwinds for Avon as a brand. Sorry, I interrupt you, Tobias.
No, thank you so much for that, Roberto. Let me make the last question only. In regards to the cyber attack, so we had kind of this postponement in sales. You are kind of increasing investments in technology as you kind of address the different issues. Is it fair to assume that we should see no additional impact from the cyber attack going forward? It's not that we are kind of moving sales from one quarter to the other one, but because of that, there will be a backlog, and then in the fourth quarter, we might be sending back again. I just want to kind of understand if this is just one-off, there won't be any type of impact in terms of sales trend going forward.
This is right. This is a one-off, and the number that we are communicating are factual numbers. We are not even speculating in potential sales loss that we would recuperate. The number that we are announcing, the BRL 450 million, are numbers that truly we had, we invoiced, and it just ended up being captured in Q3 versus Q2.
Perfect. Thank you so much again, and congratulations.
Thank you, Tobias.
Thank you. The next question comes from Andrew Ruben from Morgan Stanley.
Hi. Thanks very much for the question here. I have two on the international business. For Avon International, you reported an active rep decline in the mid-30s for the quarter. I was just wondering if you had a sense how much of that reduction might be temporary versus permanent churn. Particularly anything you've seen as we've gotten a broader reopening. Second on the Natura brand's expansion internationally. I just wanted to know if there was any update on learnings from Malaysia and further thoughts on how big of a priority the further brand expansion is, say, over the next year. Thank you.
Hi, Andrew. Roberto here. I'll start with the first part of the question. Then I'll invite JP to talk about some of the learnings in Malaysia and how we are thinking about really strengthening Natura brand, potentially moving beyond Latin America. What we saw at Avon, the reduction, it is primarily driven by the impact, especially at the beginning, the lockdown, especially in Europe and some markets that are very important for Avon International. If you think about Philippines and South Africa, those were very strict lockdowns that still have an impact, and that end up creating this reduction.
I think it is temporary in the fact that, as we see some easiness in the lockdowns, we enroll again more representatives. The reason why we're bullish is we are seeing some of the markets that are seeing, call it easiness of the lockdown, like in the U.K. We double the amount of appointments and recruitment in the last couple of weeks in U.K. You put that and then you added all the digitalization, e-brochures that now we are making available in many more markets at Avon International. That also creates a possibility to recruit in a much easier way and bring also a different profile of representatives to Avon International. We think that this was temporary, to answer your question.
I think moving forward with the new commercial model, which by the way, the Avon International team did a lot of learning from the Natura commercial model, and we are kind of importing a lot of the same concepts of long-term relationship value, simplifying the model, segmenting the representatives and the sales leaders. Those are all things that are being implemented in the back half of the year, together with the relaunch of the Avon brand. JP, do you want to talk about Natura International and some of the learnings in Malaysia? JP?
We are experiencing some technical difficulties. Please stand by.
Okay. I can talk a little bit about the learnings, Andrew, in Malaysia until JP comes back. Again, it is a prototype, one that we are doing in conjunction with the head franchisee, actually, of The Body Shop in Malaysia. The way we are thinking is really already establishing Natura brand as a kind of omni-channel brand as we think about the internationalization of Natura. We already start with a combination of some physical presence, retail, to drive awareness and help build the brand. At the same time, e-commerce, and at the same time, social selling. What we are seeing from a positioning, from a portfolio perspective, that has a lot of traction with the consumers.
I think I would say at this point, we are a little more advanced in the retail piece as we continue to do recruitment and training, especially on the social selling piece. The idea is having a positioning of the brands that brings a lot of the Amazon, a lot of the biodiversity, the ingredients, and at the same time, in terms of go-to-market, thinking about a more omni-channel approach.
Yeah. That all makes sense. Thanks very much.
Roberto, just to tell you that I'm back.
Sorry. Anything else to add, JP? Sorry.
I didn't hear the question. Sorry, I was disconnected.
I think we can move on. It was related to Natura Malaysia, but I think I covered, JP.
Okay. Thank you.
Look forward to if there's any other questions.
Thank you. Our next question comes from Richard Cathcart from Bradesco BBI.
Yeah. Hi, guys. Good morning, and also congrats on the performance through the quarter. Just a couple of questions from me on The Body Shop. The first one, if you could just give us an update on how the performance has been both for The Body Shop and Aesop selling into China via Tmall. I think that's something that has been commented in previous quarters. It'd be interesting to hear how that has performed, just given the situation around the pandemic. The second issue is just about the new store concept at The Body Shop, just where we are on that. I know there's probably several things going on at the moment, just given a review of the store network, but just where the company is in terms of the new store concept and rolling that out. Thanks very much.
Yeah. Thank you for the question, Richard. One, again, I think it is just important to-- as we didn't talk much about The Body Shop and Aesop, just highlighting a remarkable performance of those two retailers business that we have in the group. The ability to offset, and most of them offset close to 85% of the COVID-19 impact when we had over 90% of stores closed at the beginning of the quarter. Really, the pivot, the shift to e-commerce, Aesop grew over 400% in e-commerce, and The Body Shop between The Body Shop At Home and e-commerce, almost 300%. It's just remarkable. The e-commerce piece also has Tmall, as you talk about it, and we are seeing a continuous growing both at Aesop and as well as The Body Shop.
We think that China is a huge opportunity for us, and our teams are working very diligent in seeing how can we even strengthen our position beyond the Tmall platform in China, and we think that starting next year, we'll see even more stronger presence of our two brands in China. That is something very important for the group and for our brands. The second part on the new layout for The Body Shop that we call Workshop. We were planning to potentially open another 10, 12 of those new design stores this year. Of course, we paused because of everything that's going on. To your point, we are re-looking at the right now footprint of the stores and where to open. It's interesting that we are seeing, again, the stores in the markets that have been open.
It's interesting that we are seeing, of course, a lower traffic, a higher basket. It's interesting that the e-commerce have not come back to prior to the crisis, which means that the e-commerce are actually stabilizing at a much higher level than before, which is very exciting about the possibility for us to continue to optimize our footprint of physical stores and make sure that we have in the right location, the right places, with the right look and feel. While both the e-commerce and the At Home will play an important role to complement. That's the reason why we also announced our interest with At Home in the U.S., which is also a super interesting opportunity for the group and for The Body Shop to strengthen their position by leveraging, again, the physical stores and now the direct selling go-to market.
Great. Thank you very much for the reply, Roberto. Thanks very much.
Thank you. This concludes today's question and answer session. I would like to invite Mr. Roberto Marques to proceed with his closing statements. Please go ahead, Mr. Marques.
Thank you. Thank you all for joining the call. I think as you all saw from today's results, we are very proud and actually very pleased with the results that really demonstrate this resilience and adaptability of our omni-channel model, while at the same time, really strengthening our balance sheet, and also making these strategic moves looking toward the future. Again, I would also highlight the super important unveiling of our 2030 Commitment to Life, our sustainability goals, which are core to our strategy, core to our future, and outline very ambitious goals that we needed to achieve, and we are very excited about that and working with a lot of partners to make sure that we can create this positive impact on our triple bottom line approach. Thank you again so very much for your attention. I wish you all a good day and good weekend.
On behalf of all of us, please stay well, stay safe. Thank you very much.
That concludes the Natura audio conference for today. Thank Thank you very much for your participation. Have a good day.