Guilherme Castellan: Hey, Bob. Thanks for the question. Yes, as Fábio have mentioned, again, I’m going to start. And of course, if Fábio has anything to add, feel free, right? Especially in the short and medium-term, the revision of footprint is an action that both Avon International and The Body Shop were taken in order to improve profitability, right? So just talking a little bit about Avon International, right, we continue to see good momentum coming from a few geographies, right, especially when we look at the Middle East and Asia — Turkey, Middle East and Asia region, and we will look at APAC with a very high weight and performance of Philippines, those regions continue to do well. Now of course, Central, Eastern Europe in 2022 was impacted by the war in Ukraine, but we see resilience.
We see some countries improving results. And that is also seen in the operational KPIs, especially with the new commercial model. Now Western Europe, again, mainly the developed markets are the regions that we are seeing softer results, right? Now the strategy for Avon will continue to go two-folds. First is, of course, looking at markets with EBITDA and cash flow, particularly cash flow have been negative. And again, with no plans to turnaround that quickly, right? So we will continue to exit those markets, as we have seen in 2022 and we are working on that. Of course, that exiting market is not just pressing a button, right? It requires a lot of work. And again, hopefully, we have more news to communicate to the market as we progress. And the second part is to continue to work on the transformational costs in the markets that we operate.
So more recently, we announced the one Europe structure for Avon, right, in which basically were merging the two sub-BUs into one leadership team only, with a significant reduction of headcount and in a more lean and agile — and of course, giving more focus as well to the countries that we believe, that will make a difference in the future. So that again will also continue. So you should expect to see more news from Avon in terms of market exits as soon as — as well as more news in terms of transformational savings across the BU. On The Body Shop, you are also correct, Bob, that more recently also became a focus of ours to look again at our footprint and focus not only the core channels, right, that are basically retail, e-commerce and franchises, the franchises model, which is very important for The Body Shop, but also at the right geographies, right?
So a few markets that we used to operate on a standalone basis, right, those markets were significantly impacting EBITDA margin, especially on a few channels. And that’s the case, of course of the U.S. as we communicated, that we are basically ending the operations of The Body Shop at Home in the country, and of course, also looking to optimize the rest of the channels in North America in general, right? We’ll continue of course to focus on the markets that we believe that we have, again, a strong competitive advantage. UK being of course, our main market, right, but also some very strong markets that again — we have our own stores or our franchises models in Europe in the rest of the world. But again, you should also expect to see some news about rightsizing and exiting some markets for The Body Shop doing 2023.
