02.22.13
Sheri McCoy knows she has her work cut out for her. The Avon CEO has been on the job for nine months now, and while the company's recent past has been dismal, she assured analysts at the recent CAGNY event that better times are ahead.
"Currently, Avon has been underperforming for years," she acknowledged. "Our financial health has eroded (but) we have a clear sense of urgency."
Although the company posted better than expected results in the fourth quarter, even better results are on the way, McCoy insisted, now that the company has:
• Upgraded senior talent;
• Set expectations for accountability and discipline;
• Implemented a stabiliziation plan for each key market;
• Prioritized product categories;
• Fast-tracked mobile and social media plans;
• Started to reduce its cost base;
• Improved focus on cash management; and
• Started to improve its cash position.
Despite the difficulties, McCoy said Avon has several positives going for it, such as its global footprint. The $300 billion global beauty business is expected to grow 6% per annum over the next five years. But while developed markets are growing just 2% a year, developing markets are expanding at a 12% rate. Seventy-five percent of Avon's business is in developing markets, McCoy noted.
By 2016, the company will post revenue growth in the middle single digits, have an operating margin in the low double digits and realize cost-savings of $400 million.
To get there, the company will execute growth platforms, drive simplication and efficency and improve organizational effectiveness, according to McCoy.
"Currently, Avon has been underperforming for years," she acknowledged. "Our financial health has eroded (but) we have a clear sense of urgency."
Although the company posted better than expected results in the fourth quarter, even better results are on the way, McCoy insisted, now that the company has:
• Upgraded senior talent;
• Set expectations for accountability and discipline;
• Implemented a stabiliziation plan for each key market;
• Prioritized product categories;
• Fast-tracked mobile and social media plans;
• Started to reduce its cost base;
• Improved focus on cash management; and
• Started to improve its cash position.
Despite the difficulties, McCoy said Avon has several positives going for it, such as its global footprint. The $300 billion global beauty business is expected to grow 6% per annum over the next five years. But while developed markets are growing just 2% a year, developing markets are expanding at a 12% rate. Seventy-five percent of Avon's business is in developing markets, McCoy noted.
By 2016, the company will post revenue growth in the middle single digits, have an operating margin in the low double digits and realize cost-savings of $400 million.
To get there, the company will execute growth platforms, drive simplication and efficency and improve organizational effectiveness, according to McCoy.