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Could Avon’s new ‘miracle’ anti-aging cream help revive its fortunes?

By Simon Pitman , 13-Sep-2012

Avon’s recently launched ANEW Clinical Pro Line Eraser is said to be causing a stir amongst consumers in the US market, raising hopes that it may help turn around the company’s fortunes.

The new cream is marketed on the back of claims that it contains collagen and elastin-boosting ingredients that are 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 the NeoStrata Compoany, a new Jersey-based skin care company which has developed a range of skin care solutions mainly targeting the dermatological category.

The technology works by increasing the levels of the enzyme PLOD-2, which is said to maintain skin cell structure and in turn giving a younger looking complexion. However, as the body ages, it also produces less of this enzyme, leaving collagen strands to become loose, in turn leading to wrinkles.

A-F33 targets key enzyme in collagen production

A-F33 is said to work by increasing the availability of PLOD-2, leading to stronger collagen strands and in effect deactivating the collagen blockers that prevent the production of new collagen.

Avon says that the fact that the A-F33 technology can be combined with Alpha Hydroxy Acid, its latest offering to the anti-aging category provides a ‘quantum leap’ in formulation.

But perhaps Avon’s biggest boost has come from the fact that most of the mainstream media has picked up on the launch of the product, with publications such as The Daily Mail and The Huffington Post picking up on the story.

Accompanying the Avon marketing campaign for the product have been striking before and after photos, showing significant improvement in wrinkles and fine lines following regular use of the cream, which have also served to add to the buzz.

Indeed, the Daily Mail, which is one of the leading online news providers in the US and the UK, went with the headline ‘Will Avon’s $40 wrinkle cream wipe out the need for cosmetic surgery?’

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.

Likewise, the company is continuing to real from on-going investigations into bribery and corruption charges alleging that Avon employees in China may have been bribing officials.

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