It was revealed on Tuesday that Avon Products (NYSE:
) has reported a 2% drop in quarterly sales, thanks to higher
costs and the fact that the number of active sales
representatives has dropped.
The bad news continues for AVP too, with the world's largest
direct seller of cosmetics reporting that net income fell 81.5%
in the first quarter. That's a stunning decline for the company,
and one has to wonder if it will regret turning down the $10
billion takeover offer from rival Coty last month.
It is far too soon to say, but new CEO Sheri McCoy will
certainly know now that she has her work cut out for her. Avon
reported net profit of $26.5 million, or 6 cents per share, on
revenue of $2.58 billion. Compare that with a year earlier, when
the company reported net income of $143.6 million, or 33 cents,
on revenue of $2.63 billion.
As well as the higher costs and lack of sales reps, AVP has
seen increasing competition from drugstores in the U.S., price
drops in Eastern Europe and problems with the ordering systems in
Brazil. These are the sort of issues that McCoy will have to deal
with fast. Employees are already being laid off.
Avon's profit sat at 10 cents, which is significantly below
the 28 cents analysts had predicted.
North America seems to be where the company is currently
falling down, with revenue down 4% to $490.3 million. Roughly 80%
of its more than $11 billion annual revenue now comes from
The company, whose brands include Skin-So-Soft, Anew and Mark,
is doing better abroad. In Latin America, revenue edged up 1% to
Avon won't be saying too much on guidance just yet either,
saying in a statement that, "We look forward to communicating
further with investors about our future growth strategy at the
Some investors and shareholders will feel that they deserve
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