How Has The Year 2016 Shaped Up For Avon Products?

by Trefis Team
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The year 2016 has been an important year for Avon as the company finally saw signs of recovery in its performance after persistent losses for almost five years. Avon’s selling off of its North American business and new strategic plans for its business seem to be gearing the company towards a better future. Let us explore how this year has shaped up for the company.

Where Does Avon Stand Now?

  • Avon experienced a steady recovery of its financial performance over 2016. The selling off of 80% of its North American business to Cerberus Capital and, in turn, receiving an investment of $605 million from the latter turned out to be a turning point in Avon’s trajectory. The 130 year-old company, which had witnessed its last revenue growth way back in 2011, was almost on the verge of a bankruptcy when Cerberus came to its rescue.  Since then, Avon chalked out a strategic road map to make a recovery. The company is making good progress with the plans. For example, it is on track to make a $70 million cost savings in 2016. It has also targeted a cost saving to the tune of $350 million over the next three years from January 2016. Its focus on the top ten markets for growth had resulted in recovery of the regions, especially in its important markets like Brazil and Mexico. In the third quarter, the average order for the company went up by 4% mainly boosted by a 5% rise in the products and price mix.

  • Along with the financial aspects, there have been changes in administration, too. The company will start operating from its U.K. head office from January 2017. Along with this, it also announced Jamie Wilson as its Executive Vice President and Chief Financial Officer, effective January 1, 2017. Currently, Avon’s Chief Financial Officer and Chief Operating Officer, James Scully, will continue in his position of the Chief Operating Officer and will carry on leading Avon’s transformation plans. Also, effective January 3, 2017, Chris Wermann will be the new Chief Communications Officer for the company.
  • Avon is also focusing on connecting better with the millennial customers and active representatives. Towards that end, Avon’s new #BeautyBoss campaign revolving around the real life success stories of Avon’s representative show Millennials that being associated with Avon can make them their own boss. In one of the videos a representative talks about how she started off selling Avon’s products just for some extra income, but gradually increased the business to the extent that she could pay off her student loans. 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 potentials and their loyalty to the company.

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

Notes:

1) The purpose of these analyses is to help readers focus on a few important things. We hope such lean communication sparks thinking, and encourages readers to comment and ask questions on the comment section, or email content@trefis.com
2) Figures mentioned are approximate values to help our readers remember the key concepts more intuitively. For precise figures, please refer to our complete analysis for Avon Products

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