The allegations prompted a preliminary investigation after it was alleged that Avon executives contacted market analysts that were involved in separate investigations into allegations of possible bribery in travel, relating to executives offering officials travel and entertainment expenses, dating back to 2005.
The financial world responded positively to the news, with Avon shares, which have been battered in recent years by poor financial results and the ongoing investigations, rising by 2 percent in early morning trading last Friday, after the announcement was first made.
Citigroup cites reason for cheer
An analyst’s note from the Citigroup said the news was positive, stating that it ‘removes and overhang on the stock’, although the same statement did also air caution due to the fact that investigations are still ongoing with regards the China bribery charges.
The investigations into the China allegations began in 2008 and have been an open sore for the company ever since.
In January of this year an internal probe into the allegations led to the firing of CFO Charles Cramb, along with four other executive, while in February the company appointed John Lin to head up the China operations.
Latest ANEW anti-aging cream gets thumbs up
Further good news came last week for the company when it was widely reported that the launch of its new anti-aging cream, ANEW Clinical Pro Line Eraser, has been causing a stir amongst both the media and consumers in the US market.
The new cream is marketed on the back of claims that it contains collagen and elastin-boosting ingredients said to plump up the skin, restore elasticity and give it a more youthful appearance.
The technology behind the innovation is an amino-fill named A-F33, which has been developed together with NeoStrata, a new Jersey-based skin care company which has developed a range of skin care solutions mainly targeting the dermatological category.
Poor financials and bribery
The hope is that the launch of the new product will help the company to revive a big drop in its mainstay US market and European sales, which have had a considerable impact on the overall results in the past year or so.
For its most recent second quarter results, Avon reported one of its worst quarterly performances in many years, with both sales and profits taking a big hit on the back of tough market conditions and an ill-defined product portfolio.
Total revenue was down 9 percent to $2.6bn, or 1 percent in constant dollars, a figure that represented a unit decline of 4 percent and a price/mix increase of 3 percent.
But the biggest hit was net profits, which fell 70 percent to $63m, compared to $206m in the corresponding period last year, a figure that had investors riling, in turn causing share prices to fall by more than 3 percent in pre-market trading today.