Avon Products, Inc. (NYSE:AVP) has lost its shine as it struggles to boost its sales. The direct seller company of beauty products remains entrenched in the U.S. and depends on personal relationships to support its sales. It has been unsuccessful in designing an online plan and cashing on the opportunities offered on the social media platform. Moreover, the representatives’ focus is divided in between the beauty products and housewares and other products.
The performance
Avon has suffered drastically due to the ongoing problems in the existing system. The dismal financial problems, exodus of representatives and strategic missteps have forced the company to look out for fundamental change in the structure of the company. It is exploring the options including a possible sale or an exit from its struggling business.
The recent efforts are not considered enough to support the falling operations of Avon. The impact was seen on Avon’s share price which declined more than 40% in last one year. It was even delisted from the S&P 500 in March 2015. The sales force in the U.S. has also dropped in the past 19 quarters.
The issues
Avon performance was also significantly affected by a bribery scandal based in China. It proved a costly affair to the company as Avon lost billions of dollars in penalties and legal fees. It affected the reputation of company in the market. Sherilyn McCoy, the CEO said that she is not shy away from accepting the challenges. She took the role of CEO with Avon three years ago.
Her appointment was confirmed just days after the company rejected Coty Inc (NYSE:COTY) ‘s offer to acquire the company for $24.75 a share. In last three years, Avon’s annual sales have declined 20% to $8.85 billion. It posted losses of $389 million last year. The major issue seen is the lack of effective strategic plans to boost the declining sales.
