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Avon Debt Downgraded by S&P

Despite CEO change, the outlook remains murky.

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By: TOM BRANNA

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Andrea Jung is gone, but Avon’s troubles are still here. Credit rating agency Standard & Poor’s on Monday revised its outlook on Avon Products Inc. to “negative” from “stable.”


The outlook reflects Avon’s continued poor operating results and weak credit metrics, S&P said.


On Thursday, direct beauty products seller Avon Products said its third-quarter net income fell 81%, hurt by the stronger dollar and an impairment charge. The company also slashed its dividend as it works on a turnaround.


The company has been struggling to turn around its business at home and in emerging markets, but results remain weak.


“Avon’s third-quarter results remain disappointing. The challenges that Avon faces developed over time, not overnight, and it will take time to implement the solutions as well,” said Sheri McCoy, CEO in a statement. “However, we have identified the first critical actions to return Avon to a position of financial health and improve our competitive position. With a clear focus on growing the top-line, managing costs, and improving our working capital, I am confident that we are moving Avon toward a steady recovery.”


S&P affirmed its “BBB-” rating, the lowest investment grade, on Avon’s senior unsecured debt.

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