Avon’s Struggle to Stay Afloat

May 2, 2012 • Breaking News, Fashion Blog, Industry

The widely known cosmetics seller, Avon, just released that their first quarter profit fell 82%. Last month a $10 billion bid was given to takeover the fragrance maker Coty, however now Avon’s stock is dipping. Shares dropped 8%, which means losing $1.73 to close at $19.87. Now the pressure is on the board along with newcomer to the company, CEO Sheri McCoy, who recently left a former executive position at Johnson & Johnson.

Last week McCoy took over the position from CEO Andrea Jung, who held this position for quite sometime until Jung stepped down due to overseas bribery prodding and poor results with the company. McCoy made it clear that the current focus is to stabilize the Avon company.

“[Avon] has lost market share and missed expectations. it has had problems executing. It has faced operational and strategic issues,”  McCoy admitted to analysts this week.

Due to the crowded markets of independent sellers and cosmetics company, Avon has been having a difficult time to keep a hold of talented sales reps. The company has plans of keeping each rep motivated along with being well compensated, something that is their top priority.

Along with plummeting profits, many other problems have surfaced. Just last year Avon suffered in their Brazil market after glitches in the computer systems messed up orders. McCoy stating that they are “running out of wiggle room” and while competition is increasing Avon is in need of stepping up and creating more products and advertising for the “Brazilian-centric.”

Within Brazil and Russia sales have been increasing due to more reps being added to the Avon team, however, in North America revenue dropped 4% due to the company’s sales reps shrinking 10%. With all of these problems, it is no wonder why the company is struggling. Worldwide, the company has been seeing an increase in problems for quite some time. How Avon will deal with these problems, both globally and on the home-front, is definitely something that will create an impact on them staying in business.

– Lindsay Grundy

Source: New York Post

Image: Avon

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