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Avon Divests Liz Earle; Focuses on Strategic Initiatives - Analyst Blog

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Avon Products Inc.AVP announced the sale of Liz Earle, its wholly owned, UK-based natural skincare brand, to Walgreens Boots Alliance. The deal was finalized for a total cash payment of £140 million.

Avon disclosed that the proceeds of the above mentioned transaction may be utilized for the redemption of $250 million, 2.375% Notes due Mar 2016. Management believes that this will help in optimizing the capital structure and facilitate in taking strategic decisions. Avon's long-term plan is to promote its beauty and skincare brands.

Liz Earle was purchased by Avon in Mar 2010. The segment was unsuccessful in contributing much to revenues of the parent company, accounting for roughly 1% of it in 2014.

Avon's performance has gradually softened due to continuous loss of active representatives, declining volume, unfavorable foreign currency translations and reduced margins in mature markets like North America.

The company's performance continued to falter as it posted dismal first-quarter 2015 results, where both top and bottom lines fell year over year. Moreover, the company expects sales for the current year to bear a significant impact from ongoing foreign currency translations.

However, this Zacks Rank #3 (Hold) company has been persistently working on various restructuring initiatives, targeted toward cost control and bottom-line improvement. The company is also looking forward to explore diverse growth opportunities and augment organizational effectiveness.

Some better-ranked stocks in the same industry include Helen of Troy Limited HELE , Coty Inc. COTY and Inter Parfums Inc. IPAR . While Inter Parfums sports a Zacks Rank #1 (Strong Buy), Coty and Helen of Troy carry a Zacks Rank #2 (Buy).

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AVON PRODS INC (AVP): Free Stock Analysis Report

INTER PARFUMS (IPAR): Free Stock Analysis Report

COTY INC-A (COTY): Free Stock Analysis Report

HELEN OF TROY (HELE): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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