Avon Products Inc. chairman and chief executive officer Andrea Jung fielded several questions from shareholders about the ongoing bribery probe at the firm’s annual shareholders’ meeting Thursday morning.
This story first appeared in the May 7, 2010 issue of WWD. Subscribe Today.
Responding to one attendee’s request for an update on the company’s internal investigation into the alleged bribery of Chinese government officials, Jung reiterated her comments to analysts on April 30 during the company’s earnings call, saying: “It’s an ongoing investigation and the facts are under review.” As she previously stated, Jung told shareholders Avon first disclosed the voluntary investigation in October 2008, and the allegations came in the form of a letter written directly to her. The company began the investigation under the oversight of its audit committee and conducted by outside counsel, and reported the allegations to the U.S. Securities and Exchange Commission, as well as the Department of Justice.
Jung told shareholders that the allegation that triggered the investigation was in China only, and that conducting compliance reviews in multiple countries was “the appropriate thing to do.”
The shareholder responded, “I hope we get periodic updates from the company. This is bad publicity.” Another shareholder asked if Avon expected to take a writedown should the allegation result in lost business in China. Jung reiterated the investigation is ongoing and the company expects its business in China to grow profitably.
Speaking about the company’s performance, Jung said the company went on the offense last year, attracting more active representatives, highlighting smart value products, or items priced $5 and below, and wringing out costs. Last year, the firm achieved revenue growth of 6 percent in constant currency, or down 3 percent on a reported basis, to $10.38 billion. “In 2009, we’ve proved that our business model could sustain us even in tough times.”