Shares in Natura & Co, the Brazilian personal care giant, fell following news of the sale of its luxury skincare brand Aesop to L’Oreal for US$2.5 billion.
Natura & Co shares were down 8% at US$4.83 at the beginning of Wednesday trading after getting a small bump earlier this week when the deal was first announced.
One of the main reasons behind the decline in Natura & Co's stock price is likely due to the perception of Aesop being a valuable and growing asset for the company.
Aesop was one of Natura & Co's most profitable brands, registering $537 million in sales in full-year 2022.
The decision to sell the brand may have caused some investors to question the company's long-term strategy and growth prospects.
Furthermore, the sale of Aesop may also lead to a decrease in the company's revenue and profit margins.
Another factor contributing to the drop in Natura & Co's stock price could be related to concerns over the company's debt. The company reportedly took on a significant amount of debt to acquire Aesop in 2013, and the sale of the brand may not be enough to offset this debt entirely.
Overall, while the sale of Aesop may have provided some short-term financial benefits for Natura & Co, the long-term impact of losing one of its most profitable brands may have led to investor uncertainty and a decline in the company's stock price.
Contact Angela at angela@proactiveinvestors.com
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