“The entire organization is working with a sense of urgency,” the firm’s chief executive officer Sheri McCoy told analysts during the company’s first-quarter earnings call on Tuesday. She later added, “We’re seeing some progress with pockets of the business showing early signs of stabilization. While we anticipate that there will be some bumps along the way, we’re confident that the company is on the right track.”
The firm is beginning to deliver early signs of progress, reporting a first-quarter net loss attributable to Avon of $13.7 million, or 3 cents a diluted share, compared with net income of $26.5 million, or 6 cents a share for the year ago period. Excluding certain items — including a charge related to the devaluation in Venezuelan currency — adjusted net income was $112 million, or 26 cents a share. These figures beat Wall Street analysts’ consensus estimate of 14 cents a share. The news sent Avon shares to a 52-week high of $24.30 on Tuesday morning. Shares closed at $23.17, up 4.18 percent, on Tuesday.
McCoy, who took the helm at Avon one year ago, said the company’s focus is on stabilizing its four regions, particularly North America and Asia-Pacific, where revenues have declined in the quarter. Revenue in North America slid 15 percent to $406.2 million, as the number of active representatives in the region declined by double digits. “Today, frankly, the U.S. is a drain on the overall business,” said McCoy. “What success looks like for us is to stem the decline and really get it to a position where we’re strengthening the profitability.”
Revenue in Asia-Pacific declined 10 percent to $200 million, driven in part by a 31 percent drop in revenue in constant dollars in China where Avon is transitioning from direct selling to a retail model. In Latin America, revenue was flat at $1.14 billion, with Brazil up 11 percent in constant currency, and in Europe, Middle East and Africa revenue ticked up 1 percent to $733.1 million. McCoy noted that markets such as Poland and Russia have fully transitioned to an online ordering model over the last 18 months. She added that while Avon is encouraged by these changes, they are more difficult to implement in the U.S., due to an older IT infrastructure.
Avon’s net revenue in the quarter declined 3.9 percent to $2.48 billion, compared with $2.58 billion in the year-ago quarter, but was flat in constant dollars. Total units declined 3 percent. The number of active representatives gained 1 percent.
Total beauty sales declined 5 percent, or 1 percent in constant dollars. By category, in constant dollars, fragrance gained 6 percent, while personal care was flat, and color and skin care were down 2 percent and 9 percent, respectively. McCoy said she was most disappointed by the slide in Avon’s skin-care business. She called out the launch of Anew Clinical Pro Line Corrector Treatment with A-F33 in the U.K. as a bright spot, but said the company needs to better define the positioning of its midtier skin-care range.
When asked by one analyst if a direct-selling company like Avon needs to advertise given it has legions of representatives toting product brochures, McCoy said, “It depends on what market we’re in and where we land with the household penetration. If we have heavy household penetration in some markets, what we see is that advertising does, in fact, help grow our brand.” She pointed out that Avon spent less on advertising in the quarter than it did in the year-ago period. “In some areas where we’ve walked away from advertising we’ve seen a negative impact on our brand..…We also have to get smart about how we use media. Digital advertising, for example, is much less expensive than TV. So we’ll continue to look at the right media mix.”
“Azzedine has been one of the biggest influences in my life. He has always been such a strong, loving, fatherly figure to me. I call him Papa. His designs are indescribably unique, they are pieces of art. He knew how to make the female form look its loveliest. I have so many memories of him; my favorite might be during my first show with him in Paris. He liked me and he wanted to help me get more work. He called all his friends at Kenzo and Comme des Garcons, and asked them to book me. They said, ‘But she can’t walk!’ And he said, ‘but she has such a great ass!' His friendship and support has been the great privilege of my career. I can't imagine life without him. Repose en paix mon Papa.” - @stephanieseymour tells @wwd. #wwdfashion (📷: @steveeichner) #alaia #azzedinealaia
Azzedine Alaïa, flanked by two of his closest friends, models Stephanie Seymour and Naomi Campbell.
He designed Seymour’s dress for her 1995 wedding to Peter Brant, and treated Campbell (who famously called him Papa), like a daughter. For more on the legendary designer, tap the link in bio. #wwdfashion #alaia #azzedinealaia
Azzedine Alaïa's “I-did-it-my-way” ethos stood out starkly at a time when brands are experimenting with consumer-facing fashion shows, coed formats and trans-seasonal collections – anything to perk up lackluster sales of ready-to-wear in an age of Insta-everything. “It’s not creation anymore. This becomes a purely industrial approach,” the late designer told WWD in an interview last year. “But anyway, the rhythm of collections is so stupid. It’s unsustainable. There are too many collections.” Read more about the iconic designer’s life and work on wwd.com, link in bio. #wwdfashion #azzedinealaia (📷: @WWD Archive, 1986) #alaia
Sneaker reselling app @goat’s latest exhibit, "The Greatest: New York," tells the story of New York's sneaker culture. To celebrate the exhibit, an intimate crowd gathered on Thursday night at the pop-up gallery space, located at Platform in Culver City, to hear guest speaker and illustrator @esymai talk about her own rise in streetwear and women in the business. "For me I'm just someone who is creative. I like to create things," said Chang. #wwdfashion
Azzedine Alaïa, one of the most iconic couturiers of the modern era whose body-con designs defined Eighties fashion, has died in Paris. The diminutive Tunisian-born designer, known for his structured knitted dresses with fitted waists and impeccably cut, figure-hugging second skin silhouettes was deeply admired by his peers, and counted supermodel Naomi Campbell - his adoptive daughter - among his inner circle, one of a gang of glamazons including Farida Khelfa, Carla Bruni and Stephanie Seymour who became ambassadors of his style. (📷: Alexandre Guirkinger) #wwdblast