Sales: $7.7 billion for cosmetics, fragrances and toiletries. Corporate sales: $10.7 billion. Net loss: $42 million.
Key Personnel: Sheri McCoy, chief executive officer; Kimberly A. Ross, executive vice president and chief financial officer; Fernando J. Acosta, senior vice president and president, Latin America; Jeff Benjamin, senior vice president, general counsel and chief ethics and compliance officer; Bob Briddon, senior vice president and president, Asia Pacific; Cheryl Heinonen, group vice president, global corporate relations and chief communications officer; Donagh Herlihy, senior vice president, chief information officer and eCommerce; John Higson, senior vice president and president, Europe, Middle East and Africa; Pablo Munoz, senior vice president and president, North America; Patricia Perez-Ayala, senior vice president and chief marketing officer; David Powell, senior vice president of business transformation and global supply chain.
Major Products: Color Cosmetics—Avon Color, Jillian Dempsey Professional, Smooth Minerals and Anew Beauty; Skin Care—Anew, Anew Clinical, Anew Genics, Clearskin Professional; Fragrances—Viva by Fergie, Derek Jeter Driven and Derek Jeter Driven Black, Hervé Léger Homme, Outspoken Intense by Fergie, Step Into Sexy, Scentini Fragrances, Outspoken by Fergie, Rare Diamonds, Eternal Magic and Far Away; Personal Care—Skin-So-Soft, Avon Naturals and Foot Works; Advance Techniques; Mark cosmetics and fragrances; Liz Earle Naturally Active skincare.
New Products: Anew Clinical Absolute Even Multi-Tone Skin Corrector, Anew Clinical Pro Line Eraser Eye Treatment with A-F33, Avon Totally Kissable Lipstick, Super Drama Mascara.
Comments: It’s been more than a year since Sheri McCoy took over at beleaguered Avon, but company executives insist things are starting to get back on track.
“Our first-quarter results reflect continued signs of stabilization, including early progress in our cost reduction efforts,” said McCoy, chief executive officer. “I’m pleased with the performance of our Latin America and Europe, Middle East and Africa regions, particularly in Brazil and Russia. The teams there are focused on ensuring that this performance is sustainable. As for our other markets, there remains work to be done, particularly in the US.”
Wishful thinking maybe, as the first quarter of 2013 wasn’t exactly kind to the company.
Corporate sales fell 4% to $2.5 billion. Avon Beauty’s sales declined 5%. Fragrance sales increased 1%, but personal care (-3%), color (-6%) and skin care (-12%) sales were down.
Those results follow a year in which sales fell 5% and the company posted a net loss after reporting more than $500 million in profit in 2011. Sales were down in all regions. Latin America sales dropped 3% to just under $5 billion. A weak US dollar was blamed for a 12% decline in Brazil, but the company reported a slight gain in Mexico.
Sales in Europe, Middle East and Africa fell more than 6% to about $2.9 billion. Last year, Avon lumped the results of Central and Eastern Europe and Western Europe, Middle East and Africa together for the first time. Sales were off due to exchange rates, and declines in the UK and Turkey, which were partially offset by gains in South Africa.
Sales in Asia Pacific fell about 4% to $902 million, due to unfavorable results in China, where tough laws force Avon to forego its representative model in favor of traditional retail channels.
But the big problems for Avon reside in its home region. Last year, North American sales fell 7.6% and the company reported nearly $215 million in operating losses. What’s worse, the number of representatives has declined as the impact from The Great Recession waned and Avon’s internal troubles came to light. According to industry analysts, in 2007-08, total sales representatives grew by 7% year-on-year as people reached out for supplementary sources of income. As a result, Avon posted an 8% gain in revenues for 2008. The number of representatives rose from 6.2 million in 2009 to 6.5 million in 2010 that resulted in an increase in revenues from $10.2 billion to $10.8 billion during the same period. However, the number declined to 6.3 million in 2012, resulting in lower overall revenue. To help turn around North American operations, Pablo Munoz was appointed senior vice president and president, North America. He joins Avon from Tupperware Brands Corporation, where he has worked since 1993, most recently as group president of the Americas region.
To get growing again throughout the world, Avon is focused on three issues:
- Innovate the consumer proposition;
- Transform the representative experience; and
- Optimize geographies.
More specifically, Avon executives are sharpening consumer insights and parlaying that knowledge into creating and executing focused category strategies in color, fragrance, skin care and fashion and home. To boost the sales rep’s experience and income potential, Avon will rely on more technology tools and well as restore the associates’ pride in Avon, according to McCoy.
Finally, the company is committed to shoring up weak national markets and existing ones that no longer make sense. But, as more than 70% of company sales come from emerging markets, Avon executives insist the company is well positioned to grow as global purchasing power shifts East and South.
In April, the company said it was eliminating more than 400 jobs and restructuring or abandoning underperforming businesses in Africa, the Middle East and Europe.
The cuts, which represent about 1% of Avon’s work force, are part of the company’s plan to save $400 million by 2016. The 400 terminations are on top of the elimination of 1,500 jobs that the company announced in December when Avon said it would exit South Korea and Vietnam.
During the past year, a wounded Avon was being circled by Coty Inc. But in May 2012, Coty dropped its $10.7 billion offer in order to focus on its own IPO.