August 04, 2017
Q2 Revenue for Avon Down 3%
Avon Products Inc., the London-based leader in direct selling of beauty and related products, recently announced its results for the second quarter of 2017. Revenue decreased 3 percent to $1.4 billion and decreased 4 percent in constant dollars. Active Representatives and Ending Representatives, both from Reportable Segments, declined 3 percent and 2 percent, respectively.
“Second-quarter performance fell below our expectations as we cycled a strong quarter last year,” said CEO Sheri McCoy. “As previously guided, we expect the second half to yield a stronger performance based on our exciting product innovation plans and other initiatives to increase Representative activity. We continue to implement the strategies defined in our Transformation Plan to better meet the needs of our Representatives and continue progress towards delivering sustainable profitable growth in the longer term.”
Europe, Middle East & Africa revenue was down 5 percent, or 6 percent in constant dollars, impacted by declines in Active Representatives and average order. Russia revenue was up 7 percent, or down 7 percent in constant dollars, driven by declines in average order and Active Representatives. U.K. revenue was down 20 percent, or 10 percent in constant dollars, due to declines in Active Representatives and average order.
South Latin America revenue was up 4 percent, or relatively flat in constant dollars, driven by higher average order, offset by a decrease in Active Representatives. Brazil revenue was up 7 percent, or down 2 percent in constant dollars, primarily driven by a decrease in Active Representatives.
North Latin America revenue was down 7 percent, or 5 percent in constant dollars, driven by lower average order and a decline in Active Representatives. Mexico revenue was down 9 percent, or 6 percent in constant dollars, driven by declines in Active Representatives and average order.
Asia-Pacific revenue was down 11 percent, or 7 percent in constant dollars, primarily driven by a decrease in Active Representatives. Philippines revenue was down 10 percent, or 3 percent in constant dollars, primarily driven by a decline in Active Representatives.
Avon is in year two of its three-year transformation plan focused on reducing costs, improving financial resilience and investing in growth. The company expects this plan to deliver on its long-term goals of mid-single-digit constant-dollar revenue growth and low double-digit operating margin.
Halfway through the plan period, the company has seen solid progress against its first two pillars. In 2016, Avon generated approximately $120 million of cost savings and improved financial resilience by significantly strengthening the balance sheet as it lowered debt by approximately $260 million and extended its maturity profile. In 2017, the company’s cost savings target is $230 million, which includes both run-rate savings from 2016, along with in-year savings from current year initiatives. Based on savings realized through the first half of 2017, the company believes it is on track to achieve this target.
As reported yesterday, Sheri McCoy will step down as CEO and as a director on March 31, 2018, in line with her commitments to Avon’s Board of Directors to transform the business. Avon’s Board has retained Heidrick & Struggles, a leading executive search firm with particular expertise in the consumer goods industry, to assist in identifying McCoy’s successor.
To read the full Q2 report, click here.