Moody’s Investors Service has lowered Avon Products Inc.’s corporate credit rating a to “Ba2” from “Ba1” and dropped the ratings on the company’s senior unsecured regular bonds two places to “Ba3.”

The “Ba” designation is the highest speculative, or non-investment, grade family within the Moody’s ratings system.

The agency cited a number of factors — including currency volatility, inflation and the continuing decline in active representatives — for the actions. Nancy Meadows, vice president and senior analyst, said Moody’s expects Avon’s free clash flow to decline “meaningfully” and that leverage will increase to more than five times by the end of this year.

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“It may be difficult for Avon to turn around its performance given the competitive and macroeconomic challenges the company is facing in key markets, particularly since it is happening against a backdrop of significant [foreign exchange] volatility that is diminishing cash flow,” said Meadows, acknowledging that the firm does enjoy the benefits of “significant scale, a global footprint, good liquidity and no near-term maturities.”

The rating outlook is negative.

Moody’s also lowered Avon’s probably of default rating to “Ba2” from “Ba1.”

The report noted that “Avon faces competitive and structural challenges associated with the direct sales distribution model and is struggling to slow the decline in active representatives, a key to stabilizing performance. With approximately 90 percent of earnings outside the U.S., Avon is also vulnerable to FX volatility that will negatively impact earnings and cash flow in 2015.”

Reliance on the direct sales model “diminishes the company’s flexibility to adapt and maintain market share in a changing global consumer environment” characterized by retail penetration in emerging markets and the continuing growth of e-commerce.

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