New Year, same story as more woe hits Avon


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New Year, same story as more woe hits Avon

Related tags United states dollar

Avon has warned that the stronger dollar could have a big effect on this year’s sales as fourth quarter sales were down thanks to the currency situation, and it may continue throughout 2015.

Avon is not the only US-based beauty company to be hit by the stronger dollar, with the likes of Procter & Gamble and Estée Lauder also hit, but it is another obstacle in the way of the recovering manufacturer.

Avon says that the January currency rates will likely hurt its revenue in 2015, as it has done for many US multinationals; but that in constant dollars, sales were poised to advance.

Company CEO, Sheri McCoy, says that based on the strengthening of the US dollar, Avon expects the impact of foreign currency on its reported results to be “significant.”

“We are working to mitigate as much of the impact as possible. Avon has weathered emerging market cycles in the past and I'm confident we will do so again,"​ she explains.


For the fourth quarter of 2014, Avon reported total revenue of $2.3 bn which is a decrease of 12%, with beauty sales declining 14%, and the company posting a loss of $331 m.

However in constant dollars, Avon saw growth in several segments including beauty, and the average order increased 9%.

Regional sales fell across the board, dropping 15% in Latin America, 11% in EMEA, 12% in North America and 2% in Asia Pacific.

"While progress against our financial goals in 2014 was slower than I would have liked, I am pleased with the sequential improvements we made in several key markets and categories in the second half of the year,”​ adds McCoy.

“We have stronger management teams across our key markets and better discipline in executing consistently against Avon's core processes. Going into 2015, we intend to build on that momentum.”

Not alone

Avon is not alone in feeling the effect of the stronger dollar gaining against international currencies, as some of the biggest US-based international cosmetics players are set to battle against currency headwinds in 2015 too.

Last week Estée Lauder executives said that a combination of the currency headwinds and declining growth in the China market would likely mean that the company would post full year sales either somewhere between being flat and a decline of 1%.

For the company’s second quarter, ending 31 December 2014, it posted sales up 1% to $3.04bn. However, underlying growth was underpinned by currency translations, with like-for-like net sales registering an increase of 5%.

A similar story was told at P&G, where the company reported that net sales fell by 4% to $20.2bn, impacted by a 5% impact from negative currency translations.

“We have and will continue to offset as much currency impact as we can through pricing and productivity cost savings,”​ said P&G CFO Jon Moeller in a conference call. "This is the most significant fiscal year currency impact we have ever incurred."

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