New York, NY
212.282.5000
www.avoncompany.com

Sales: $6.5 billion for cosmetics, fragrances and toiletries. Corporate sales: $8.8 billion.

Key Personnel: Sheri McCoy, chief executive officer; James S. Scully, executive vice president and chief financial officer; Fernando J. Acosta, senior vice president and president, North Latin America and Andean Cluster and head of global brand marketing; Jeff Benjamin, senior vice president, general counsel and chief ethics and compliance officer; Cheryl Heinonen, senior vice president, corporate relations and chief communications officer; John Higson, senior vice president and president, Europe, Middle East & Africa and head of global field operations; David Legher, senior vice president and president, Avon Brazil and South Market group; Pablo Muñoz, senior vice president and president, North America; Susan Ormiston, senior vice president, human resources and chief human resources officer; Nilish Patel, senior vice president and president, Asia Pacific; David Powell, senior vice president, business transformation and global supply chain; Brian Salsberg, senior vice president, global strategy.

Major Products: Color—Avon Makeup Collection; Avon Naturals and Foot Works; Skin Care—Anew, Anew Clinical, Anew Genics, Clearskin Professional and Avon Solutions; Fragrances—Outspoken and Outspoken Intense by Fergie, Derek Jeter Driven and Derek Jeter Black, Hervé Léger Homme, Step into Sexy, Scentini Fragrance Collection, Rare Diamonds, Eternal Magic, Far Away.  

New Products: Color—Ultra Color Indulgence lipstick, Super Extend Winged Out mascara; Fragrance—Outspoken Fresh.

Comments: It’s been another tumultuous year, but after all the headlines, false bids and SEC-implemented penalties, one of the world’s biggest names in direct selling is still, well, selling—just not as much as it has in years past. Corporate sales fell 12% in 2014, though constant revenue fell just 1%. Beauty results were a bit better, but just a bit; sales fell 12% and constant revenue was flat. More specifically, skin care and fragrance sales dropped 11% to $2.6 billion and $2.1 billion, respectively; while color cosmetic sales fell 13% to $1.5 billion.

By region, sales fell in North America and to a lesser extent in Asia; these declines were partially offset by growth in Latin America and Europe, Middle East & Africa.

Avon’s North American division’s sales fell 17% last year, and at $1.2 billion are just half of what they were in 2007. Avon blamed a decline in active representatives in North America, while gains in Latin America were the result, in part, of inflationary pricing in Venezuela. Elsewhere, growth in South Africa and the UK lifted results in Europe, Middle East and Africa. Revenues fell in Asia, despite gains in the Philippines. Overall, more than 85% of Avon’s revenues come from outside the US, which is why many observers have urged company executives to exit the US in favor of faster growing emerging markets that may be better served by the direct sales model.

CEO Sheri McCoy admitted times are tough at Avon, but she assured investors that the company’s top 12 markets are stabilized and well positioned to continue to progress toward sustainable, profitable growth. But in order to achieve that, Avon has to solve the tricky issue of keeping and growing its active representative base while improving the online experience for consumers—without alienating representatives; sort of like a dog chasing its tail, it just goes round and round. One good outcome from 2014 is that Avon finally put its legal woes to rest. The company agreed to pay $135 million in fines related to a bribery scandal in China, but only after spending $300 million in legal fees.

The new year didn’t start off with good news. For the first quarter of 2015, corporate sales fell 18% to $1.7 billion—but the company was quick to note that at constant exchange rates, revenue actually rose 1%. Beauty sales declined 17% to just under $1.3 billion, as all three units reported declines. Skin care sales fell 17% to $532 million; fragrance sales dropped 18% to $423 million and color cosmetics sales fell 16% to $336 million. Sales in Latin America fell 22% to $836 million; sales in Europe, Middle East and Africa fell 16% to $550 million; North American sales fell 18% to $242 million; and sales in Asia-Pacific fell 1% to $164 million.