Avon sells UK cosmetic player Liz Earle
Avon is currently facing a deep financial crisis, with sales slipping by over 20% during the course of the past two years, leading to a problem of mounting debts.
The company has implemented a significant restructuring program, which has led to a significant reduction in its global footprint, including pulling out of a number of markets in both Europe and Asia.
Part of Avon’s aim to ‘strengthen its balance sheet’
"Avon remains committed to our strategic priorities, and we are focused on promoting our own skincare and broader beauty portfolio. It is important to ensure all areas of the business are well-positioned to deliver near-term contributions as well as long-term opportunity. This transaction allows Avon to realize immediate benefits while continuing to strengthen our balance sheet," said Avon CEO Sheri McCoy.
"Liz Earle is the perfect fit for Walgreens Boots Alliance where it already has a strong presence in its retail stores."
Avon acquired Liz Earle back in March 2010, when it was integrated into the company’s global skin care portfolio, but continued to be operated as a standalone business, managed by its co-founders.
Liz Earle expands off QVC
Liz Earle is a UK-based natural skin, hair and make-up player, which has been continuing to expand into the US market thanks to its association with Avon and the QVC shopping channel.
The company was set up in 1995 by co-founders Liz Earle and Kim Buckland, and was started as a skin care line based on botanical and natural ingredients.
The company has since launched into five different categories, and in 2014 it accounted for approximately 1% of Avon’s total consolidated revenues, which totaled $8.6bn in 2014.
Avon results continue to slow
Avon’s revenues for 2014 were down by 12%, and in the first quarter of 2015 the results have continued to show the same story.
Reported sales for the quarter were down 18% to $1.8bn for the first quarter, a figure that resulted from the double impact of currency headwinds and weak North American sales.
Underlying results looked healthier though, with constant dollar sales increasing by 1%, underlining the hefty impact of currency translations against the strong US dollar as well as the fact that there was strong growth in Europe, the Middle East and Africa.
Thanks to the significant restructuring program that has cut back on costs significantly, the net loss was reduced, down from $167m to $146m, but adjusted net income was $17m compared to a figure of $52m, underlining the impact of restructuring costs.