Avon shares dive as quarterly revenues miss analysts’ estimates

Avon shares dive as quarterly revenues miss analysts’ estimates

Direct sales giant Avon has seen its shares drop by 19 percent as its total revenue fell 11 percent to $1.40 billion in the three months ending 31 December, short of average analysts’ estimate of $1.43 billion, according to a report by Reuters.

The dive was attributed to a fall in product demand in Latin American markets, which dipped 15 percent to $488.3 million, as well as a fall in the number of sales representatives, which declined 6 percent in the quarter – the largest drop being in the United Kingdom, Brazil and Russia.

The company reported restructuring costs of approximately $126 million before tax, which was mainly put down to its restructuring plan. Net Loss was $77.6 million, compared to a profit of $91.5 million.

Jan Zijderveld, Avon CEO, said, “We are in the initial stages of our turn-around plan with fourth-quarter results showing sequential improvement in revenue trends in 4 of our top 5 markets, as well as some early signs of progress against our core strategies. As we look over the course of 2018, we are seeing tangible signs of increased productivity by our Representatives, with sequential increases in Average Representative Sales, Net Price Per Unit and e-commerce.
“We have begun to identify repeatable business models in training and recruiting, while reducing our cost structure and taking steps to simplify our business infrastructure. Revenue growth management across our portfolio and positive momentum in premium products, bundles and regimens are driving improved price/mix.”

The beauty segment fell 2 percent, hit by low demand in Brazil for its color cosmetics products.

The sales drop comes just months after the company launched its Open Up Avon restructuring plan, which aims to work on the drop in sales representatives. The company is aiming to recruit and retain more staff, while addressing its direct sales model online.

1 Comment

  1. Too early to say whether the company’s restructuring plan is working, but the Q4 figures are disappointing, to say the least.

    Still much work to be done for the long awaited turnaround to become a reality.

    Reply

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