Dive Brief:
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Avon was able to boost its operating profit thanks to its recent cost-cutting efforts, but investors balked at its compounding losses and sent its stock down Thursday. Q4 net loss was $333 million, compared to a loss of $331 million year over year.
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While international sales have been stronger in the past for Avon, and private equity firm Cerberus Capital Management is in the process of taking over its struggling North American business, headwinds from the strong dollar and a dip in sales in Brazil hit the retailer in Q4. Shares were down Thursday 17% to $2.71 midday; shares fell by more than two-thirds last year.
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The company has excised its North American sales from reports in light of the Cerberus deal.
Dive Insight:
Optimistic talk last month from Avon and Cerberus executives was met with skepticism from analysts who said they wanted more details about any turnaround plan, dismissed much of the companies’ talk as“age-old,” and said the company’s reluctance to reveal cash flow is worrying.
On a conference call with analysts Thursday, CEO Sheri McCoy emphasized the importance of the company’s plans with Cerebrus and said the company would continue to focus on cutting costs.
She also said that the retailer is working to bring in more salespeople (known for more than a century as “Avon ladies”) to boost its direct selling in high-potential areas like Brazil.
“[O]ur most important accomplishment of 2015 is setting a new path forward for Avon,” McCoy told analysts. “This includes our strategic partnership of service which provides the solution for Avon North America and provide funds, focus and resources for our international market. Overall, while we face significant macro issues, we made solid operation progress in 2015 and we executed a transaction that was a catalyst to position the company to sustainable profitable growth.”
