Avon fortifies US business, closes operations in the Caribbean

By Deanna Utroske contact

- Last updated on GMT

Related tags: United states, Avon

Avon fortifies US business, closes operations in the Caribbean
The direct sales beauty company terminated contracts with representatives in 16 island nations, not including Puerto Rico and the US Virgin Islands.

Affected cosmetics sales professionals were notified late last month via conference call or email. And, as of today those representatives are unable to place orders with Avon.

Jamaica, Haiti and the Bahamas are among the nations that the company will no longer serve. Avon spokesperson Lindsay Fox told the Associated Press on Friday that “the company will still serve eight islands including Puerto Rico and the U.S. Virgin Islands.” ​She would not comment on the number of representative affected but online commentators have speculated that it’s in the hundreds of thousands.

Fox told the AP that Avon made the decision in order to “focus its resources on improving its U.S. business.”

Results
Loyal Avon consumers and their trusted intermediaries seem to be without recourse: "I'm still wondering if this is really happening because this is my only source of income. It took me 11 years to build this business and then someone calls you on a two-minute conference call saying that they will be ceasing their operation in your territory -- it's really not news anyone wants to hear," ​Claudette Walters, anaward-winning Avon representative from Jamaica, told Karena Bennett of the Jamaica Observer​.

This draw down is a reality of the company’s investment in emerging markets. The global beauty and personal care economy simply cannot scale commercially in every nation with eager shoppers and savvy entrepreneurs.

Walters was featured in that same publication a few years back after she purchased a five-bedroom house with income from her Avon sales business. “Currently, Walters oversees more than 800 representatives who she said are also uneasy about the matter,”​ Bennett reported.

Contingency
Describing her experience with Avon’s change in strategy, Walters stated: “When we went in the question and answer session on Friday we thought they would have provided us with some more information, but when we asked the questions they tried to answer them from the letter that was emailed and that was not enough.”

The local, small-business economies in these Caribbean counties will certainly feel the loss. "It is devastating because we have a lot of representatives who are in a steady job but still look towards this because the job may not be able to cover all their expenses,"​ Walters told Bennett.

Q4
Earlier this month, the company “warned that the stronger dollar could have a big effect on this year’s sales as forth quarter sales were down thanks to the currency situation, and it may continue throughout 2015,” ​wrote Cosmetics Design​ in an article on the company’s ongoing challenges.

Looking to the year ahead company CEO Sherri McCoy stated, “we expect the impact of foreign currency on our reported results to be significant. We are working to mitigate as much of the impact as possible. Avon has weathered emerging market cycles in the past and I'm confident we will do so again.”

Related topics: Financial focus, Business & Financial

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