PROSPECTS Premium colour cosmetics achieves strong growth despite a slight slowdown The best performance in colour cosmetics in was achieved by the premium segment as consumers are willing to spend more for premium products in this category. With the devaluation of the pound, tourists and non-UK consumers are helping boost sales of premium beauty products, although the increase in prices for British consumers contributed to a small slowdown in value sales. Moreover, thanks to the health trend, a holistic approach to make-up is growing amongst British consumers boosting sales of facial and eye products.
A reverse stock split could be declared by the board. Investors were not pleased with Avon Products Inc.
Sheri McCoy announced she is finally leaving Avon in Marchand the board is looking for a replacement from outside of the company. With the number of representatives and revenue declining despite an increase in advertising, the new CEO may need to create a completely different business model that stresses e-commerce more with less emphasis on its old army of sales representatives.
The current outlook for AVP shareholders is bleak. Second Quarter Avon reported 2Q results last week that killed the stock. This is the fourth quarter in a row that results greatly disappointed investors with a subsequent sharp drop in AVP stock price.
When comparing 2Q toit is important to remember that 2Q results were artificially inflated to get a short-term spike in earnings.
That was one of the metrics that enabled Avon to issue new debt. The lower credit terms in Brazil continues to negatively impact earnings as accounts receivable are written off this year.
The decline in 2Q revenue was in spite of an increase in advertising. Clearly, it may need to rethink its rate of return on higher advertising. All companies have issues and problems, but it is how management confronts these problems determines the success of its business.
It often just makes problems worse. For example, the 2Q results were negatively impacted by a major problem in Mexico. Management promoted a new product in Mexico which created an unexpectedly large volume of orders that it was unable to fulfill. It had to incur high shipping costs to bring additional product in from other countries to partially meet the demand, but still unable to make timely deliveries.
It is basic Management that a plan is created prior to promoting a new product to meet various levels of new orders.
This was not just an isolated incident. I have had an extremely negative opinion of her ability to manage Avon. She should have been fired years ago. Indicative of her terrible managerial skills is that she did not even groom a successor.
The board is instead retaining an outside executive search firm to find a replacement. Shareholders suffered dearly under her reign. The reality is that it has too much debt versus a shrinking business model. It may need to do an in-court restructuring to eliminate most of its debt.
These metrics clearly indicate Avon is in serious financial trouble. There must be other financial items that generated interest expenses in 2Q besides long-term debt. So far, there does not seem to be any issues about vendors modifying their terms, but the accounts payable to inventory ratio needs to be monitored going forward for indications of possible policy changes.
E-commerce and Changing Its Business Model Avon needs to face reality that its business model needs a major overhaul. It needs to greatly expand selling via e-commerce directly to the final customer bypassing its sales force. Yes, this e-commerce would effectively be competing with its reps and could antagonize its 6 million sales force.
Collectively, these two different distribution methods are needed to save Avon from completely imploding.
Its current website, Avon. It is just mechanical and functional. Avon is a beauty company. The website should be glamorous, sexy, and about looking younger except for teens who want to look older. The current site is none of these.
The customer should have the ability to adjust the amount of makeup and application style to see various results on their picture.Because the beauty business is market-driven, marketing drives many beauty companies. Cosmetics companies that plan ahead, and encourage marketing and logistics functions to work together, may have a better chance at successfully completing their missions more cost effectively.
Colour Cosmetics in the United Kingdom: The best performance in colour cosmetics in was achieved by the premium segment as consumers are willing. Supply Chain.
Avon expects its factories, manufacturers, vendors or agents (“suppliers”) to act responsibly in all respects and to do their utmost to ensure that no abusive, exploitative or illegal conditions exist at their factories’ workplaces.
MAC Cosmetics, stylized as M·A·C, is a cosmetics manufacturer founded in Toronto in by Frank Toskan and Frank Angelo. The company is headquartered in New York City and became part of the Estée Lauder Companies in MAC is an abbreviation for Make-up Art Cosmetics.
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After more than years of making beauty products in the U.S., Avon is selling its last domestic factory to a French cosmetics manufacturer.