Avon’s Q3 2016 Performance Is Expected To Continue Showing Signs Of Recovery

Avon is slated to release its third quarter 2016 earnings on November 3rd. After selling off ~80% of its underperforming North American business to Cerberus Capital, and receiving a total investment of $650 million from the latter, Avon seems to have turned over a new leaf in its growth journey. The company’s strategies focusing on streamlining its operations and reducing costs along with its focus on building a strong representative base to expand its market reach, are all bearing positive results for the company so far. Avon is also revising and customizing its pricing and product mix in several regions and that seems to be showing an improvement in sales.

Cost Saving Plans And Focus On Its Top Brands And Markets

Avon’s transformation strategies include reduction of costs to the tune of $350 million over the next three years. Avon’s product strategies comprise of focusing on the growth of the top 40 brands that is responsible for ~80% of its revenues, simplifying its product portfolio by consolidating disjointed brands under a common umbrella, and taking steps to minimize the impact of inflation in the top markets.

Focus On Its Biggest Market, Latin America

Since over 50% of Avon’s revenues come from Latin America and Brazil is the most important country for the company in that region, Avon takes special measures to revive sales in the market which had remained weak so far on account of the economic slowdown and the imposition of Brazil’s IPI taxes. However, the company seems to be slowly recovering in Brazil. Avon is implementing strategic pricing in markets such as Mexico and Brazil in order to cater to the lower purchasing power in the region on account of the economic slowdown. It is investing significantly on the active representative training and retention in the region–aiding the representatives in building their businesses, providing them with the required channels to reach out to customers.

Campaigns To Attract More Millennials As Active Representatives

Avon’s new #BeautyBoss campaign seems to be targeting the younger beauty users and active representatives. The company is trying to create an image makeover of its active representatives through the campaign. The new representative image is built to attract the more entrepreneurial minded Millennials. The new advertisements revolve around the real life success stories of Avon’s representatives. One of Avon’s primary strategic aims is to build a robust representative base, as being a direct selling company, a lot of its growth depends on the representatives’ selling potential and their loyalty to the company. Targeting millennial representatives might help the company in connecting more with the clientele of the same age group, since millennials are the most important beauty consumers currently, and all the leading beauty companies seem to be trying to lure them with their products.

Have more questions about Avon Products (NYSE:AVP)? See the links below:

• What Is Avon’s Fundamental Value Based On 2016 Estimated Numbers?
• Revlon Versus Avon: How Do The Top Line And Bottom Lines Fare Currently?
• Why We’re Revising Our Price Estimate For Avon From $3 To $5?
• What Led To Avon’s Revenue And EBITDA Decline Over The Last Five Years?
• How Did Avon’s Different Segments Perform Over The Last 5 Years?
• What To Expect From Avon Products Q1 2016 Results?
• Avon Products Q1 2016 Results
• How Is Avon’s Financial Health And What Are The Implications?
• Will Avon Products Be Impacted By Brexit?
• How Do We See Avon Products’ Top Line Trending?
• How Is Avon Products’ Beauty Business Expected To Trend?
• Avon Products Q2 Results Suggest That The Company Might Be On Track For Recovery
• How Is Avon’s Fashion Products Segment Expected To Progress In The Next Five Years?

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