Is the Death of Avon the Only Outcome Now?

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Avon Products Inc. (NYSE: AVP) watched its shares hit a new all-time low on Thursday after the company offered a dull earnings report. What’s even worse is that some are even calling for the chief executive officer to step down. The stock is trading around $3 right now, after having been a $23 stock in 2013.

Keep in mind that Avon is in the midst of a multiyear transformation plan focused on reducing costs, improving financial resilience and investing in growth.

The company said that it had a net loss of $0.12 per share and $1.4 billion in revenue, compared to consensus estimates from Thomson Reuters of $0.07 in earnings per share (EPS) and $1.44 billion in revenue. The same period of last year reportedly had EPS of $0.07 and revenue of $1.43 billion.

In terms of its segments, Avon said:

  • Europe, Middle East & Africa revenue was down 5%, or 6% in constant dollars, impacted by declines in Active Representatives and average order.
  • South Latin America revenue was up 4%, or relatively flat in constant dollars, driven by higher average order, offset by a decrease in Active Representatives.
  • North Latin America revenue was down 7%, or 5% in constant dollars, driven by lower average order and a decline in Active Representatives.
  • Asia Pacific revenue was down 11%, or 7% in constant dollars, primarily driven by a decrease in Active Representatives.

On the books, Avon’s cash and cash equivalents totaled $633.8 million at the end of the quarter, down from $654.4 million at the end of the previous fiscal year.

Sheri McCoy, CEO of Avon, commented:

Second-quarter performance fell below our expectations as we cycled a strong quarter last year.  As previously guided, we expect the second half to yield a stronger performance based on our exciting product innovation plans and other initiatives to increase Representative activity. We continue to implement the strategies defined in our Transformation Plan to better meet the needs of our Representatives and continue progress towards delivering sustainable profitable growth in the longer term.

Shares of Avon were last seen down about 11% at $2.98, with a consensus analyst price target of $4.61 and a 52-week range of $2.92 to $6.96.