Avon US on the block?
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Avon Products is reported to being weighing options for the future of its North American business.
A report in the Wall Street Journal this week stating the company was “exploring strategic alternatives” led to an increase in the struggling company’s stock price of 18 per cent at one point. Its market value had fallen 44 per cent during the last year.
Avon US and Avon Brazil are the achilles heel of the global cosmetics business. Brazil is its largest market, but demand is falling there.
In the US, the direct to consumer sales model is losing favour as shoppers move online to buy goods saving time of in-home displays and appointments with ‘Avon Ladies’ who are proving harder to recruit.
The Wall Street Journal clarified in its report that there was no “imminent” deal.
Avon US has lost money for three consecutive years – it accounts for 14 per cent of the brand’s global turnover.
But CEO Sheri McCoy, working to turn the business around, has predicted a return to the black in 2015.
Questions & Answers
Q.Which specific parts of Avon's global business are causing significant problems?
Which specific parts of Avon's global business are causing significant problems?
Avon's North American business and its operations in Brazil are identified as the main challenges for the global cosmetics company. Both regions are struggling, with demand falling in Brazil, its largest market.
Q.What is the primary reason for Avon US's declining performance?
What is the primary reason for Avon US's declining performance?
The direct-to-consumer sales model used by Avon US is losing appeal. Shoppers are increasingly buying goods online, reducing the need for in-home displays and appointments with 'Avon Ladies', who are also harder to recruit.
Q.How significant is the US market to Avon's overall financial performance?
How significant is the US market to Avon's overall financial performance?
The US market is a notable part of Avon's operations, accounting for 14 per cent of the brand’s global turnover. However, it has been losing money for the past three consecutive years.
Q.What is the CEO's outlook for the struggling US business?
What is the CEO's outlook for the struggling US business?
CEO Sheri McCoy is actively working to revitalise the business. She has publicly predicted that the Avon US division will return to profitability during the financial year 2015.
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