Avon Having Trouble Getting Rid Of North American Business, Sales Plummet

Sherylin S McCoy,CEO,Avon


Avon shares slid by more than 7% on Tuesday to around $7.53 a share.

Last month, the stock surged by more than 15% after the Wall Street Journal reported that it is exploring strategic alternatives for its North American business, meaning the company is looking for ways to improve its competitiveness.

The initial report from WSJ said the company is looking to sell some or all of this unit. But according to a New York Post story published late Tuesday, this process isn't going very well.

The Post reported that companies interested in buying out Avon are losing interest because they are struggling to finance an offer.

The Post quotes one hedge fund investor as saying: All in all, I don’t see a deal happening unless Avon basically gives away its North America business for essentially nothing.

Avon also reported weak first-quarter results last Thursday. Revenues fell 18% due to the strong dollar, but North American revenues, which weren't subject to same currency impact, also fell 18%.

Avon posted a loss of $147 million in Q1. Avon relies on direct sales through representatives, and the number of its foot soldiers fell 1% in the quarter; it was the 20th consecutive quarter of declines, according to Deutsche Bank data cited in the Wall Street Journal.

Avon shares have fallen nearly 20% year-to-date, and 44% over the past 12 months.


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