Despite reporting a revenue loss for the quarter, Sheri McCoy, CEO of Avon Products, says the company is on track: “Our first-quarter results were in line with our expectations, and we are executing against our transformation plan with speed and rigor.”
Full speed ahead
It’s early day on the beauty company’s return to global profitability. But Avon Products is sticking to its strategy and its schedule. “Since sharing the plan with the investment community in January, we have successfully completed the sale and separation of the North America business, implemented a new organizational structure, identified actions to deliver our 2016 savings targets, and reconstituted our Board of Directors," say McCoy, in a press release about the quarterly results.
"With these actions, we are well-positioned as we move forward aggressively to drive out cost, invest in growth, and improve our financial flexibility,” she asserts.
To reflect the company’s new global structure, Avon Products has reorganized its operating model and its overall financial management and reporting methodologies. For instance Avon Products’ reportable segments are now South Latin America, North Latin America, Europe, the Middle East & Africa, and the Asia Pacific.
Revenue in both the North and South Latin American regions were down this quarter, as was the representative count. “Active Representatives were down 1% year over year, as increases in Europe, Middle East & Africa were more than offset by declines in the other reportable segments, most significantly South Latin America,” explains the company’s press release.
In North Latin America revenue was down 11% (up 2% in constant dollars). While the representative count was down, the average order in the region was higher this past quarter. In Mexico, Avon Products’ Fashion & Home items account for the larger orders.
Results were worse in South Latin America, with revenue there down 28% (down 2% in constant dollars). Though, the average order was higher there as well. Brazilian taxes had much to do with the losses in this region.
In that country alone, revenue was down 33%. And Avon Products acknowledges that “this market continues to be impacted by a difficult macroeconomic environment.” Argentina, by contrast, contributed close to 3 points of constant dollar growth to the company’s revenue in the South Latin American region.