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 third quarter results. This event is being recorded, and all participants will be in a listen-only mode during the company's presentation. After Natura'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, and questions may be asked normally by participants connected from abroad, either in English or Portuguese. Should any participant need assistance during this call, please press star zero to reach the operator. We have a simultaneous webcast that may be accessed through Natura's IR website, www.natura.net/investor. 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 a historical fact and reflect the beliefs and expectations of Natura & Co's management. This presentation also includes pro forma and adjusted information prepared by the company for information and reference purpose only, which have not been audited. 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. I'll turn the conference over to Mr. Roberto Marques, Executive Chairman of the Board for Natura & Co Mr. Marques, the floor is yours.
Thank you. Good morning. Good afternoon to all of you, depending on where you are. Thank you for joining us for this call to present our third quarter and nine-month 2018 earnings. I will start with a few introductory remarks on our performance. José Filippo, CFO of Natura & Co and Natura, will comment on our financials. I will make some concluding remarks. I will then open the floor to your questions. For the Q&A session, we'll be joined by João Paulo Ferreira, the CEO of Natura, David Boynton, the CEO of The Body Shop, and Michael O'Keeffe, the CEO of Aesop.
We're all in London this morning, a beautiful morning here in London, where we had a very productive board of directors meeting and where Natura's three founders, Luiz Seabra, Guilherme Leal, and Pedro Passos, were distinguished as Personalities of the Year last night by the Brazil-U.K. Chamber of Commerce. Of course, our investor relations team, headed by Viviane Behar, will also be available to you after the call to respond to any additional questions that you might have. Let's start on slide three. Let me begin with a quick overview of Q3. With double-digit growth in revenue and adjusted EBITDA more than doubling, Natura & Co posted yet another strong performance across the board. All three of our brands and businesses contributed to this very solid performance. We're very happy with that. Let me start with Natura.
Natura outperformed the market in Brazil in key categories and continued to gain market share and to see the benefits of the relationship selling commercial model. Consultant productivity improved for the eighth consecutive quarter, and the number of consultants actually grew in Q3, attesting the renewed attractiveness of our brand. Natura's multi-channel model continues to evolve, with more than 650,000 consultants now using our exclusive mobile platform, online sales growing high double digits, and 12 stores opening in Brazilian cities in the past quarter. Aesop, we're also showing strong momentum, gaining market share while rolling out our relationship selling model and digital strategy. Let me now talk briefly about The Body Shop. The Body Shop continued to show progress in the implementation of its transformational plan.
Pre-EBITDA more than doubled in the quarter, excluding the expected transformational cost of BRL 24 million that we spoke last quarter that we booked in Q3, demonstrating new advances in the operational efficiency and our ability to really execute the plan. Like-for-like sales in our own stores grew a very healthy 3.1% in Q3, while overall sales were stable despite 58 fewer stores as The Body Shop continued to optimize its network. As you know, The Body Shop entire organization is fully mobilized to deliver a successful Christmas campaign that is very important for the year result of the business. Finally, Aesop. Aesop turned in another quarter of remarkable growth, with sales up in high double digits, rising all channels and geographies.
Our like-for-like were up 17% in Q3, the company is also becoming more omni-channel, with online sales doubling from last year even as these have continued to open signature stores with six new openings in this past quarter. Natura & Co continued to improve its financial structure also de-leveraging, and we are on track to achieve our 2021 target of returning to our pre-acquisition investment iteration, that, as you know, is one year ahead of our initial plan. Consistent with our triple bottom line approach, the group also saw some notable advances in sustainability, including commitment to ban animal testing that I will detail later in the presentation. Slide on Natura, was the only Brazilian company to figure in the global corporate responsibility CR RepTrak 100 survey published by Forbes magazine, ranking fourth overall.
As we see Q3 provide new evidence of the growing momentum and the strength of our global multi-brand, multi-channel group. Let me now hand over to Filippo, who will detail our numbers.
Thank you, Roberto, and hello to everyone. Before going to our financials on slide five, I thought it would be helpful to step back for a second and provide a bit of explanation on the various adjustments that continue to affect our numbers and give you some visibility on their impact. Indeed, this quarter was marked by several non-operational adjustments. First, Natura Brazil and LATAM were impacted by the IFRS rule on the classification of late payment charges on receivables with effect on Natura Brazil's net revenue and EBITDA of Natura and Natura LATAM's net revenue. Natura Brazil's net revenue, cost of goods sold, and EBITDA were affected by the reversal of tax provisions booked last year. Next one was Natura's P&L, which was impacted by IAS 29 and IAS 21 accounting standards relating to the hyperinflation in Argentina.
As already mentioned last quarter, The Body Shop's EBITDA in this quarter was nine months, reflected the booking of transformation costs both in Q3 for BRL 24.7 million and in the nine months for BRL 62.4 million. To make numbers comparable and focus on underlying performance, which as Roberto mentioned, we consider very solid. These adjustments have been excluded from the numbers I will be commenting today. Also, please note that The Body Shop's 2017 numbers include pre-acquisition pro forma figures from January through August for the sake of comparison. Next slide six. I'll start this overview of our P&L with our pro forma consolidated revenues on this slide. As shown in the graph, which rose in double digits both in Q3, which saw a 16.6% increase, and in the nine months with a rise of 13.7%. These results from growth in all three of our businesses.
Natura posted strong single-digit growth in both Q3 and the nine months of 9% and 7.9% respectively at constant currency, thanks to continued momentum in core categories and relationship selling in Brazil and further expansion in Latin America. The Body Shop sales were up by 3.6% in both Q3 and in the nine months. The quarter was supported by strong orders from franchisees ahead of Christmas, online sales, and lower discounting. These have posted strong double-digit growth of 34.8% and 33.9% respectively in Q3 and in the nine months of 2018. Now moving to slide seven, we turn to adjusted EBITDA, which as you see on the graph, grew by a very solid 33.7% in Q3 to nearly BRL 500 million, on the back of double-digit growth in profitability in all three businesses. On a reported basis, Q3 EBITDA was up 7.2%.
The nine-month period also saw strong growth of 29.1% on an adjusted basis and 1.7% growth in reported EBITDA. As a reminder, EBITDA's performance includes The Body Shop in the base as if it were already part of the group in Q3 2017 and is adjusted for various effects that I mentioned earlier. Turning to slide eight, we look at Natura & Co's underlying operating income, which excludes acquisition-related expenses, transformation costs, financial expenses, and income tax. As shown in the box on the slide, we posted 10.2% growth in underlying operating income in Q3 and even stronger 30.4% growth in the nine months. The Q3 growth was driven by strong performance and efficiency gains at The Body Shop and Natura.
Reported net income more than doubled in the quarter to nearly BRL 132 million, despite the hyperinflationary accounting effect from Argentina and The Body Shop's transformation costs. Boosted by higher consolidated EBITDA and lower financial expenses. Moving to next slide nine. Let me conclude this quick summary with our key financial highlights, with a look at the main aggregates of the balance sheet. Cash flow in the quarter was an outflow of BRL 9.9 million, and this reflects two main factors. First, higher working capital requirements both at Natura and at The Body Shop. At Natura, we see from higher level of inventory and lower accounts payable to suppliers, while at The Body Shop it reflects traditional seasonality. Second, the higher financial expenses from debt services related to The Body Shop's acquisition. In the nine months, the cash flow was an outflow of BRL 239.5 million.
Finally, we continued to deleverage the company in line with our expectations. Our net debt to EBITDA ratio stood at 3.27x at the end of September, down from 3.62x at the end of Q3 last year. We are thus on track to achieve our target of returning by 2021 to our leverage ratio prior to the acquisition of The Body Shop of 1.4x. After looking at our consolidated numbers, let me now comment on the individual performance of our three businesses, starting at slide 11 with Natura. Natura posted a strong quarter both in terms of revenue and profitability. We are outperforming the Brazilian market in our key categories of fragrance, body, and gifts, resulting in market share gains. And our brand preference is improving both in Brazil and in Latin America.
This solid performance reflects the success of our relationship selling model, which is leading to higher productivity in Brazil and which we are now rolling out in Chile and Peru. In Argentina, despite the challenging economic environment, our business remains resilient, thanks to our robust business model. Our innovation unit, which measures the percentage of innovative products in our gross revenue, remained higher at 61.7% in Q3. And we continued our digital expansion in the quarter. Our mobile platform is already used by 660,000 consultants in Brazil and 137,000 in Latin America, representing respectively 60% and 20% of all consultants. Next slide 12. We look at the sales performance of Natura both on a consolidated basis and in two geographic zones.
As shown in the left-hand of the slide, consolidated net revenue grew by 8.5% in the quarter and by 7.2% in the nine months on an adjusted basis. At constant currency, sales were slightly higher with growth of 9% and 7.9% respectively. This was driven by growth in Brazil and Latin America. In Brazil, adjusted net sales, excluding the effect of IFRS 15, rose by 5.8% in Q3, demonstrating the vigor of our relationship selling commercial model, while in the nine months they were up by 3.4%. In Latin America, also adjusted to exclude the effect of the IAS 29 and IAS 21 accounting standards, net sales were up in double digits both in Q3 and in the nine months by 15% and 17.4% respectively. Sales in the region were driven by Mexico, Chile, and Argentina.
At constant foreign exchange rates, growth was even higher at 16.9% and 20.4% respectively. Next slide 13. I will include Natura & Co's adjusted EBITDA on this slide. On a consolidated basis, adjusted EBITDA grew in double digits by 16.3% in Q3, boosted by higher sales and lower G&A expenses. This translates into a 140 basis points increase in margin to 20.2%. On a nine-month basis, adjusted EBITDA was up 8.6%, topping BRL 1 billion , with margin increasing 20 basis points to 17.4%. In Brazil, Natura's adjusted EBITDA rose by a strong 17.5% and margin grew by 220 basis points to 21.6%. This results from the greater efficiency of our commercial model and lower G&A expenses as a percentage of sales. On nine months, adjusted EBITDA grew by 2.8% with margin broadly stable at 18.6%.
In Latin America, EBITDA grew in double digits both in Q3 and nine months by 14% and 29.2% respectively, thanks to higher productivity and efficiency gains. At constant foreign exchange, the growth was higher at 15.9% in Q3 and 30.1% in the nine months. Let's move to The Body Shop on slide 15. Net revenue in reais increased on a reported basis by 36.8% in Q3 and by 21.5% in the nine months, helped by favorable currency effect. At constant foreign exchange, sales were up 3.6% both in Q3 and nine months, driven by stronger orders by head franchisees and strong sales both in the Asia-Pacific and European, Middle East and Africa regions. Despite 68 stores closure in the last 12 months, owned stores sales were stable in Q3. At the end of Q3, The Body Shop has 1,041 owned stores and 1,117 franchise stores.
This represents a total of 80 fewer stores over the last 12 months as the company continues to optimize its store network. Next slide. Turning to adjusted EBITA on slide 16. You see on the graph that we saw a very strong rise both in Q3 and the nine months, up 65.6% and 172.7% respectively at constant foreign exchange, and marked by an even stronger 142% and 402.4% on a reported basis. Margin in Q3 grew by 400 basis points to 8.4%, as a result of higher franchisee sales and lower discounting, which is part of The Body Shop's strategy and mix. The adjusted EBITA exclude The Body Shop's transformation costs, which stood at BRL 24.7 million , or GBP 4.7 million in Q3, mainly related to the optimization of The Body Shop's retail footprint, organizational design, and other initiatives.
These costs are part of the total previously disclosed estimate cost of GBP 30 million through 2018 and 2019. Turning now to slide 18. We round off this look at performance of our businesses with Aesop, which posted another quarter of exceptional growth. On a reported basis, net revenue grew by in reais by 67% in Q3 and by 64.3% in nine months, with a very strong performance across all channels and geographies. At constant currency, growth remained strong at 34.8% in Q3 and 23.9% over the nine months. Gross profit also grew in strong double digits, with reported EBITA up 57% in Q3 and an even stronger 82.2% in nine months or 30.1% and 64.4% respectively at constant currency. Margins stood at 9% in Q3 and 10.9% in the nine months.
Aesop continued opening signature stores, adding 23 in the last 12 months to reach a total of 219 at the end of the quarter. Let me hand over to Roberto for some concluding remarks.
Thank you very much, Filippo. Before concluding, let me just mention some notable advances in the quarter on slide 19. The Body Shop capped a 15 months long global campaign against animal testing for cosmetics by delivering to the United Nations a petition signed by over 8.3 million people. This campaign was also supported by Natura, which recently received two key certifications attesting to its commitment to end experiments on animals and allowing consumers to easily identify products that are not tested on animals. The Leaping Bunny label granted by Cruelty Free International, The Body Shop partnered in its petition campaign, and the Beauty Without Bunnies granted by People for the Ethical Treatment of Animals, a leading animal rights organization. Congratulations again to both The Body Shop and Natura for this very important undertaking.
Finally, the Aesop Foundation named the first 10 recipients of the Next Chapter project, which aims at sharing the voices of writers for marginalized communities in Australia. I'll conclude on slide 20, with just three key takeaways. First of all, as you heard throughout Filippo's presentation, Natura & Co posted a very solid performance in Q3, with each one of our business and brands performing strongly. Natura has clearly seen the benefits of its relationship-selling commercial model in a multi-channel approach. The Body Shop transformation is gaining speed and being well executed, and Aesop, remarkable growth quarter after quarter.
Second, the global momentum of Natura & Co in each of its constituent business show the strength of the global multi-brand, multi-channel group that we are building. Third, with this new quarter of solid performance, Natura & Co is on track to deliver to its medium-term financial targets while making a positive social and environmental impact. Thank you very much for your attention. Now we're going to open for Q&A, and I'll have with me again, Filippo, João Paulo, David Boynton, and Michael O'Keeffe. I'm happy to take your questions.
Ladies and gentlemen, we will now begin the question-and-answer session. If you have a question, please press the star key followed by the one key on your telephone now. If at any time you would like to remove yourself from the questioning queue, press star two. Our first question comes from Thiago Macruz with Itaú BBA.
Good morning, everyone. This is Julia speaking here. We were very impressed with the Brazilian performance this quarter. It seems that the combination of growth and margin expansion had a lot to do with the excellent operating KPIs presented by the relationship selling channel. Is it fair to say that the recurring growth in the number of consultants, combined with the sequential increase in their productivity we saw this quarter, is mainly due to the changes you implemented in the incentives model? What would be the potential other reasons, like the digital initiatives or other initiatives you mentioned in the release? What can we expect for this channel and the results of these initiatives going forward? There is one other question that is related to The Body Shop and the revenue advice from Christmas sales to franchisees you mentioned in the release.
We should expect an impact in the first quarter growth because of this phasing you have been engaging in. Thank you.
Hello, J.P. here. On your first question. Indeed, the results we are showing indicate the strength of the new model. The new commercial rules, incentives, recognition that have been implemented are working well. Not only we are getting productivity gains, but also the number of consultants in our network is really growing, as we talked about. It's proving extremely healthy. By the way, we have already rolled it out to Chile with very successful results, and most recently to Peru with excellent initial results. On top of that, I would like to highlight the strengthening of our brand and the strong innovation pipeline and the relevance of our launches, which are supporting, together with the new commercial rules, our market share gains. We are indeed gaining market share in all of our geographies. Let me hand it to David.
Hi there, David here. Thanks very much for the question. Q3, we managed to get Christmas delivered on time, something we weren't able to do last year. We're really pleased with the presentation in stores. We think we're in good shape, and we're feeling very confident about being able to deliver Q4 as planned. No negative impact there. It's all looking as we expected right now.
Okay. Thank you.
Next question, Robert Ford, Bank of America.
Hey, good morning, everyone, congratulations on the results. David, could you speak a little bit on how you're driving same-store sales at The Body Shop and your initial steps to improve pricing? Can you also discuss where you are in terms of renegotiating the rents and your vision when it comes to reimaging the store base? Within that process, is there an opportunity for landlords to co-invest with you and franchisees in terms of paying for that reimaging in the locations?
Great. Thanks very much for all those questions. I wasn't writing fast enough to be able to jot them all down. If I've missed anything, please let me know. I think one of the biggest factors that we're seeing in terms of driving like-for-like sales are lower discount. We talked a little bit about that in the results. We've been able to focus more on communicating product benefits and the very high quality of the products that we're selling in stores. I think that historically, the focus has been really about communicating discounts, and we've moved away from that with some success, and that's really helped. I think another factor in like-for-like is that in some cities and some markets around the world, where we've been reviewing our real estate position, we've seen that we're over shopped.
One of the things that's been quite pleasing so far this year is that we've seen in particular markets, as we've closed stores, sales have moved to other stores, and that's helped support our like-for-like growth. I'd say they're the two principal points. In terms of rent reductions, it's a process that's underway. We really see the most of the upsides more likely to fall into 2019 than this year. It's been a long process. We found, pleasingly, that I think the landlords, in general, are understanding that it's a changed bricks-and-mortar retail paradigm, and are receptive to having very good quality tenants like The Body Shop present and over the longer term. There's a much more open conversation happening right now than there was several years ago. Let's put it that way.
I don't know if I answered all the questions or there was something specific that I missed towards the end.
No, that was great, David. I was just curious, given the shift in the balance of power, in terms of negotiating your occupancy cost, is there an opportunity for you to go to landlords and help them pay for the reimaging? When it comes to the reimaging that you want to do in the space, have you defined the concept that you're driving towards?
Yeah, it's a great question. It's a work in progress. We're clear the concept that we inherited is not a fit for purpose. We know that-
Still don't have a reason to exist unless they're highly experiential today. We're fortunate that we happen to operate in a very experiential category, but we haven't done a good enough job of bringing that to life. There's lots of plans underway. The target that we have at present is Q3. We'll have a fully developed new concept on the ground. We'd be looking to roll out into 2020, Q3 next year, sorry, just to be specific. As you say, there's definitely been a change in the balance of power and long overdue.
Yeah. Thank you very much. Again, congratulations on the results.
Thank you.
Next question, Franco Abelardo with Morgan Stanley.
Hi. Hello. Congrats on the results. I have a couple of questions. One in more details on the sales growth acceleration in Brazil. You mentioned Natura's gaining market share in core categories. Which categories would you highlight as growing the fastest? An update on the non-exclusive franchised stores that are operated by consultants. Do you see sales in this channel growing faster than overall in Brazil? How many of the stores, consultant-operated stores, you have right now, and what's the potential for the next 12-18 months? Thanks.
Hi, Franco. Good morning. J.P. here. On your first question, we are driving market share gains in the categories we decided and planned to focus on, namely fragrances, body care, gifts as a whole. We are also experiencing excellent market share gains in face care. That's pretty in line with our predictions and the choices that we made. On the second one, the consultant franchise stores, they do grow faster than any other channel, not only because we are opening those stores, but also because their productivity is well ahead of what we predicted originally. We have roughly 100 of them currently, and we want to keep that pace, maybe accelerate a little bit more next year.
Thanks. That's great. If I can do also a quick question on Aesop related to expansion. We saw that you left 10 department stores in Aesop this quarter. Is this part of the plan, and do you expect to accelerate expansion in the exclusive stores? If so, in which regions or countries you see the biggest opportunities for Aesop? Thanks.
Thanks for the question. Over the last quarter, the reduction in department stores was primarily because we decided to exit the David Jones department store chain in Australia and move to exclusively with Myer. I can say that's had an immediate positive effect in that chain. Myer, we've already moved to a top 3 cosmetics brand across all of their stores. It was really focusing our efforts more on one partner and having a stronger presence. In terms of the question of continued signature store expansion, it's actually fairly spread across the globe. North America is still our fastest growing region. Actually, new stores in Asia, APAC, and Europe continue at pace.
Thanks very much, congrats again on the results.
Next question, Richard Cathcart with Bradesco.
Hi, guys. Good morning. Just a couple of questions, one for J.P. on Natura Brazil. Just hoping you could give us a little bit more color on the physical store strategy in Brazil. You've opened 12 stores in the quarter, perhaps if you could just give us a bit more information about how those stores are performing, and what your plans are, kind of, for additional stores and I think, kind of, a different concept in the stores over the next 12 months. Then the second question for David on The Body Shop. Just kind of going back to one of the questions that Robert made. I just wanted to understand the impact of lower discounts, because clearly it's had a positive impact on the same store sales. I was just wondering, kind of, if you've seen any noticeable impact on volumes or footfall.
Clearly the higher ticket is helping the same store sales, just kind of want to understand a little bit on the volume side. Thanks very much.
Hello, Richard. Thanks for your question. J.P. here. On our own stores, they're performing exactly in line with our prediction, and we opened a dozen more last quarter, so we currently have 36 of them in Brazil. They play a very important role to complement the other channels as we do reach other customers who are already customers of the brand in different shopping occasions. Right? That is proving very complementary to what we already do, right? We do see now people buying online, picking up in stores or going to the stores to try products and then buying with their consultant. It's building very nicely into this omni-channel approach that we had in mind when we started that. We do want to expand those stores going forward next year. Hopefully, at the same pace as this year.
Hi, it's David here. Great question. Always a risk, of course, when you're reining in discount activity. I think the thing that's been incredibly interesting for us, we've been doing this on a very careful, iterative basis through the course of the year. The last thing that we wanted to do was reduce traffic to the stores. There's already enough pressure on that, and we've seen in years gone by, looking at historical data for the business, that when there's been significant movements in price upwards, there's been dramatic reductions in transactions. We're clear that we're a value brand, and we have an accessible price point in premium beauty and lifestyle, and we don't want to lose that. Through all the various stuff that we've done, I'm pleased to say that really no negative impact on transactions.
I think the thing that's been interesting for us is the change in speech for the consultants in store. In the past, it's been very much a case of a very transactional interaction where people come into the store and the first thing they say is, "Hey, we've got some great news. We've got a fantastic deal here, and it's buy three, get three free" or whatever. We're having a more qualitative conversation about the new product launches that we're having in the store this season, the seasonal appropriateness of the products that we're featuring in the store. It's a better quality transaction between the consumer and the consultant that seems to be maintaining sales. No negative impact on transactions thus far. We're watching it very closely, but so far, so good.
Great. Thanks so much.
Thanks.
Thanks.
Next question, Joseph Giordano with JPMorgan.
Hi, good morning, everyone. Thanks for taking my questions. I just want to explore two points here. The first one is the innovation index. J.P. commented a little bit that there are plans to launch new products in the fourth quarter. I'd like to understand what's the target here in terms of innovation index and how you guys see that evolving over time. I'm just also trying to understand why it came slightly lower than the past quarters as we're seeing an upward trend here. The second question is also on the review side. In my view, the main positive surprise here was actually on the expense side. I'd really like to understand if there's more to come and what's really driving such a reduction to the admin change.
I understand there's some accounting change, but the underlying trends here are probably very favorable. Just understand here if you have several headcount reductions. What's really driving that? Thank you.
Hello, J.P. here. On the innovation index, we do consider that with the current setup of the business, that number would be fluctuating around 60%. The changes that you've seen this quarter against the previous one is absolutely in line with our prediction, right? I have to tell you as well, that we are putting more effort in sustaining our hero brands longer so that we don't have to be so dependent on new launches, right? That combination drove that number to 60%, 62%, and that's where we would be in the coming quarters. As I mentioned before, totally in line with our predictions.
Filippo, regarding the expenses, yes, we confirm that we really are committed to focus on this item and to make a strong effort to reduce SG&A, mostly coming from efficiency gains. For example, this quarter we had, as indicated, some non-recurring provision adjustments that affected positively. However, if we take out those impacts, we had a gain of efficiency there. For example, with that effect, our G&A was 14.1% of net sales, and we compare that to 14.6% in the same quarter of last year. That represents those gains there. I think that with the growth of the revenues as we expected, we continue to be not increasing the expenses and then gaining efficiency and everything else. That's why we think this is.
Perfect. Thank you.
Next question, [Tobias Angelini] with Citibank.
Yes, thank you so much. Congratulations. Quick question first on consultant growth in Brazil for J.P. There was kind of a sequential increase, and you said since the beginning of the year that at some point the base should stabilize and then start growing again. What are your expectations going forward in regards to the consultant base? That's the first question. The second question, I just want to kind of an update on the digital strategy. Really, you are expanding very fast, 23% of orders already online. Can you give us a sense of where we are, what we should expect going forward, and also some expectations how this can impact kind of margins or productivity further? Thank you.
Hi, [Tobias]. Good to hear you. On the number of consultants, as you properly picked up, I said it would drop, stabilize, and then it will grow as it did. Going forward, what we see is that it should grow sort of in line with population growth. Most single visits growth going forward with productivity gains. Going to the following question on digitization. We are accelerating as much as we can. We are targeting to have the vast majority of our consultants operating with mobile platforms that best connect them among themselves with our sales force, with Natura, and moreover, with their clients, right? We want that to happen throughout next year. We do have some major activities going on in Q2 next year that will boost that movement even further.
Okay. Should we expect any major gains or some of the gains that we might see on the SG&A line or something like that should be related to that or to the process of really kind of moving the consultants faster to the digital platform?
Well, there are efficiency gains, especially in our commercial structure. There might be other efficiency gains in our communication material, right? In support material, that as much as we can, we will use that in our growth.
Okay, perfect. Thanks. Congratulations, and thanks also for helping with the reconciliation of the financials.
Ladies and gentlemen, as a reminder, if you'd like to pose a question, please press star one. Our next question comes from Gustavo Oliveira with UBS.
Hi, good morning, everyone. Thank you for taking my question. I have two questions, one for David and the other one for Filippo. David, I want to go back to the first question of the call. Just to understand a bit your seasonality on sales here. You mentioned that you deliver your Christmas orders to franchisees on time this year, which definitely helped your sales in Q3. Will that have an impact on your total sales in Q4? Or can you still maintain the pace of growth that you're delivering at 3.6% in constant currency?
Hi. Thanks so much for the question. We're not obviously giving guidance on sales going forward and what we predict for Q4, but we're feeling very confident about the plan. Just a little precision on the point about franchisees. Last year, even when the business was in the throes of the difficulties it was having on distribution, franchisees, because of the distances, the majority of them are pretty far away from our base in the U.K. They were made a priority. Actually, a lot of the shipments that had franchisees, particularly the ones in Asia, were being delivered on time. The bigger material impact on performance and having a Christmas proposition ready in time was within our company markets closer to home, particularly the U.K. We're not really expecting to see a significant change. We have the plan.
As I said, it's looking really good in the stores. Reaction from customers and staff has been great and from our partners. Our expectation is we'll make our plan for the year.
Okay. Still around the franchisee performance. You mentioned that you had very strong like-for-like sales in your own stores around 3.1%. Is there a big gap between your own store's performance to that of your franchisees? Is there a big dispersion in sales of your franchisees network? What is the opportunity? How you address that?
Yeah, no, honestly, overall, we're looking at a pretty similar picture. It's been reasonably strong, particularly in the second half, a reasonably strong product pipeline. I would say Christmas is looking great. The performance in our [HS partners] and our own stores is similar order of magnitude. Of course, we're in a lot of markets, so there's a spectrum of performances, but overall, it's pretty much there or thereabouts.
Okay. Thank you. My last question is to Filippo, if I may. Filippo, in the second quarter, there were some large working capital investments needs in The Body Shop, and now in this quarter, there's some working capital needs in Natura Brazil. Have we reached a level where you think that the working capital investments are behind and you think you are in a breadth for cash generation already in the Q4? How do you see the evolution of these working capital investments you're making?
Yes, Gustavo, thanks for the question. I think it's a very good point. Remember that we indicated earlier that we started 2018 with a higher level of inventories. We had that situation that would impact our working capital. Because of the moment that we're having today, preparation for the last quarter, which you have typical activity, increasing activity. We still have levels that don't show the reduction. There is a lot of focus and discussion and working on trying to improve that. Going forward, by the end of the year, we definitely will be in a better situation in terms of working capital position, we benefit from the cash generation that we expect. This is Natura. As you know, The Body Shop typically has its seasonality, it's more that we have in Natura. It's going to be really improving in the last quarter.
We believe that in the end of the year, that's what we are convinced. Actually, we are committed to that, and we are confident that we can get to a better situation of working capital in the year-end and benefiting from the cash.
Okay. Thank you very much.
This concludes today's question and answer session. I would like to invite Mr. Roberto Marques to proceed with the closing statements. Please go ahead, sir.
Thank you. Again, thanks everybody for joining the call. Hopefully, that it was helpful. Our IR team will be available for any further questions. I want to take this opportunity and again, thank our teams across the board, the Natura team, The Body Shop team, Aesop, represented here by J.P., David, and Michael, and of course, Filippo, our CFO, for really a very strong Q3 and hopefully that continues to build the confidence that we're really doing something special with absolutely superior results. Thank you very much. Have a great rest of the day. Thank you. Cheers from London.
That concludes the Natura audio conference for today. Thank you much for your participation. Have a good day.