Avon rumoured to be selling its North America business

Avon rumoured to be selling its North America business

Avon is exploring ” strategic alternatives” such as the sale of its North America business, according to Wall Street Journal reports.

The company’s North American business accounted for 14 percent of its total revenue in 2014, yet it has posted losses for the last three years.

According to the Wall Street Journal report, a deal is not imminent. Nevertheless, Avon share prices rose by 18.1 percent to US$9.46 following the news on Monday.

Avon has declined to common on the speculation.

The company has reported 13 consecutive quarterly declines in revenue and has lost share price of 44 percent over the 12 months. 

A statement from RBC Capital Markets analysts noted, “We believe Avon is coming to terms with the reality that cost cuts are not the answer and it needs to recapitalize and finding funding for a massive $500M-$1B reinvestment needed to fix the business.

“Seeking strategic alternatives is likely Avon’s best option, but also a risky one for the partner involved with Avon as a fix is not guaranteed.”

Avon was due to hold an investor meeting on Monday, which it postponed, citing the recent hiring of Chief Financial Officer James Scully, who was said to need more time to prepare.