Infographic: Avon Q2 profits slump but signs of stabilization are encouraging

By Andrew MCDOUGALL contact

- Last updated on GMT

Related tags: Revenue

Infographic on Avon Q2 profits
Avon's second-quarter net income dropped 48 percent as it struggles to come to terms with its mammoth rebuild, but the signs are encouraging according to the beauty behemoth’s boss.

The cosmetics company reported earnings of $31.9 million for the three months ended June 30, down from $61.6 million a year ago, but this offers more stability to the group’s six month 2013 earnings which had been down, but showing promise, in the first quarter.

"Our second-quarter results reflect continued progress in stabilizing Avon's business,"​ said Sheri McCoy, Chief Executive Officer.

Mc Coy accepts that there is still significant work to be done to deliver a sustainable performance in the near and longer term, but is pleased with the progress to date.

“We will succeed by continuing our focus on better serving Avon Representatives, creating a compelling consumer proposition, and simplifying our business to drive both top and bottom line improvements,”​ she continues.

Stabilizing

Despite having endured a tough couple of years, which many believed would be the end for the company​, Avon is continuing to gain ground as cost saving measures and a trimmer business structure pay dividends.

According to financial research group Zacks, on top of the cost cutting initiatives, the company is also starting to show sure signs of a recovery in consumer interest for its products, after a continued downturn in its retail sales worldwide over the past two years.

In an effort to streamline the business, the company has closed a number of its divisions worldwide, including operations in Europe and the Asia Pacific region, and has also strengthened its executive structure, with a number of new appointments, including a new CEO, Sheri McCoy.

For the second quarter of 2013, total revenue of $2.5 billion decreased 2 percent, and Avon Beauty sales declined 4 percent, whilst Fashion & Home sales were up 2 percent.

The quarter also included a $79 million charge related to an expected loss on the sale of the Silpada jewelry business back to its co-founders and their families for $85 million​, much less than what it paid three years ago.

The company also said that an offer to settle bribery allegations overseas for $12 million was rejected by US authorities; a case that has been ongoing in China since 2008, and has since spread to other countries.

Related topics: Business & Financial

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