Avon Outlines Transformation, Cost-Savings Plan; Analysts Still Wary
This article was originally published in The Rose Sheet
Following Avon Products Inc.'s announcement last month that it will spin off its North American business, execs provide a strategy update for investors, including a $350m cost-savings plan.
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Management projects a strong second half after Avon's first-quarter sales advanced 2%, reported, but dipped in constant currency. Analysts received the guidance guardedly, and a group of investors led by Barington Capital are unconvinced the firm can turn things around under current leadership.
Following steady improvements over the first three quarters of fiscal 2016, Avon ends the year on a sour note with a disappointing fourth quarter. However, the international direct seller exceeded its cost savings targets and is now embarking on the next phase of its transformation plan with greater focus on growth.
Direct seller says it is on track to realize up to $90m in cost savings in 2016, which it plans to reinvest in brand support and innovation, among other initiatives. Avon’s sales continue to suffer from negative currency effects, but in constant-dollar terms, its business advanced 4% in the second quarter, the firm reports.