The U.K.’s vote to leave the European Union has had an effect on Avon Products Inc.’s business there.
“It’s funny, when we saw Brexit, we thought that was going to be the end of disruption with currencies before the recent election,” said James Scully, Avon’s chief operating officer and chief financial officer. “What we’ve seen in the U.K. has been a little bit of inconsistent performance.”
As Avon reported in its most recent quarter, in the U.K., declines in representatives were offset by larger average orders. So far, Brexit has not had a ton of impact on the consumer side, Scully said, adding, “we do think over time it will have an impact.”
“We’ve had some issues on the field side that we’re correcting, so we’ll see that response in the active representative count, and then we’ll try to maintain pricing,” he said. “The pressure from the currency, we did not anticipate that to be quite frank — it’s quite significant on that side.”
Scully made a presentation at the Bank of America Merrill Lynch 2016 Leveraged Finance Conference, in Boca Raton, Fla., on Tuesday, highlighting previously disclosed progress in the company’s transformation plan and new product developments. Scully reiterated Avon’s earlier note that it was ahead of schedule on the 2016 part of its transformation plan, under which it expected to save $90 million throughout the year. As of the end of the third quarter, Avon had already saved $80 million, Scully said. Avon’s transformation plan, unveiled earlier this year, includes $350 million in cost savings over the next three years and investment in social selling, advertising and information technology.
Looking forward, Avon’s product and innovation focus will be on skin care, Scully said, adding that Mark will relaunch in select markets next year.
Avon reported its financial results earlier in November, with net sales down 2 percent to $1.4 billion. In March, Avon finalized the sale of its North America business to Cerberus Capital Management LLC. Now, the company said almost 70 percent of its sales come from its top 10 markets: Brazil, Mexico, Russia, the Philippines, the U.K., Colombia, Argentina, Turkey, Poland and South Africa.