Avon Products, Inc. (NYSE:AVP) Updates On Progress of Transformation Plan

Chris Brown - August 3, 2016

Sheri McCoy, the CEO of Avon Products, Inc. (NYSE:AVP) reported that 2Q2016 results came better than expectation, led by improved operating performance. The company witnessed modest easing of foreign currency pressure. Prominently, the performance improvements spread across markets with 9 of company’s top 10 markets gaining from local currency.

The highlights

McCoy said that they have increased the pace of YoY improvement in many key metrics, including active representatives, operating margin and local currency sales growth. They are encouraged with the steady progress recorded on a number of fronts such as pricing, leading additional cost aspect of the operations and continuing to establish the Avon brand.

The changes Avon has made to the operating model are showing growth, providing the company with improved connectivity between the critical and corporate market. Additionally, the North American operations, which is now operated autonomously from Avon Products, is in safe hands. While the company identify that they are still in the early stages of transformation with much work and effort required, they are confident to achieve sustainable growth.

The performance

The CEO of Avon said that in order to offer clarity and better insight on the core performance of the business, they now have four different business segments. Revenue in 2Q2016 surged 5% to $1.4 billion. Active Representatives was up 1%, while Ending Representatives revenue was up 2%. The company continues to be encouraged by improving trends in Ending Representatives segment. It marks the sixth quarter in a row where the company is recording positive growth.

Average order jumped 4%, led by a 7% growth in price mix. They are taking a planned approach to pricing, strategically pricing in major markets, pricing translation and driving price through improved price mix. In 2Q2016, the adjusted operating margin showed substantial growth, mainly due to favorable mix, pricing actions and early gains of cost savings program.


Chris Brown

About Me: I have a Phd in Economics Gender: Male Interests: Playing games like cricket, volleyball Favorite Music: hip hop, rock, jazz

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