NEW YORK — Sheri McCoy, chief executive officer of Avon Products Inc., is still in the middle innings of her turnaround at the direct merchant — executing on her plan and promising better days ahead.
This story first appeared in the May 7, 2014 issue of WWD. Subscribe Today.
“We made good progress in 2013 and we have a clear path to continue on our turnaround plans in 2014,” McCoy told shareholders at the company’s annual meeting Tuesday. “I’m confident that we will succeed in returning Avon to sustainable, profitable growth.”
But the company has a way to go. Avon logged net losses of $56.4 million last year with net sales falling 6 percent to about $10 billion — a 1 percent top-line decline after factoring out currency fluctuations. A key goal is to get revenues growing at a midsingle-digit clip in constant currencies by 2016.
Although much hinges on Avon’s ability to get its top markets growing — more than three-quarters of its business comes from developing markets — McCoy underscored her dedication to the company’s home base.
“The U.S. market is still a very important and critical market for us,” she said. “It’s clear that we have not seen the improvements that we need to see, but in 2014 it’s absolutely critical that we make the strides that we need to get the U.S. to a position of profitability in 2015.”
This year, Avon will relaunch its e-commerce business in the U.S. and the ceo said the company had more work to do to modernize its operations.
But the sales representative, who taps into their personal relationships to sell beauty products and earn money while spreading the brand message, remains at Avon’s core.
“Our active representatives declined 2 percent [last year], however, the average order size was up 1 percent, which means that while there were fewer representatives selling, those who were selling were being more productive,” McCoy said.
The ceo said Avon needs to “execute on the basics” and strengthen field management and create some buzz around the brand.
“Our field creates the push and our marketing creates the pull and we need both,” she said.
Avon has had a tough go of it so far this year, with net revenues falling 11 percent in the first quarter. The company did, however, reach an understanding with authorities for a settlement related to the Foreign Corrupt Practices Act that could result in a payment by Avon of $135 million.