Avon sales and earnings dented by turnaround efforts

By

Robin Driver

Published
Nov 5, 2019

Avon Products, Inc. has announced decreases in its third-quarter revenues and income, as measures taken as part of the company’s ongoing “Open Up” turnaround strategy took their toll on its operational results.

 
The beauty company's revenue for the quarter ended September 30, 2019, fell 16.2% to $1.19 billion, down from $1.42 billion in the prior-year period.
 
By region, Avon’s South Latin America segment saw the biggest drop, posting a 23% decline in revenues totaling $494.0 million. But sales also fell 10% to $398.3 million in the EMEA (Europe, Middle East and Africa) region, 11% to $184.7 million in North Latin America, and 12% to $106.3 million in Asia Pacific.

Discussing the company’s quarterly results in a release, Avon CEO Jan Zijderveld was keen to point out that these decreases are anticipated in the company’s turnaround plan. “As expected, revenues declined as we continued to make sharper choices designed to drive a healthier, more sustainable and more profitable business,” he said.
 
He also highlighted that, despite the overall declines, the company did see an increase in average representative sales, which rose 4%, thanks in large part to increases in Latin America and Asia Pacific. This progress was achieved despite a year-over-year decline of 10% in Avon’s active representatives.
 
“Our training programs are expanding and getting stronger based on what we have learned,” explained Zijderveld. “Representatives are more productive and better practices are improving the quality of sales, both of which are crucial to sustainable, profitable growth.”
 
The company's quarterly profit totaled $106.9 million, or $0.20 per diluted share, down 6% from $114.5 million, or $0.21 per diluted share, in the third quarter of 2018.
 
Year to date, Avon reported total revenues of $3.5 billion, representing a 15% decrease from the $4.2 billion reported by the company in the first three quarters of 2018.
 
The company’s net income for the period totaled $54.7 million, or $0.08 per diluted share, down from $58.1 million, or $0.09 per diluted share.