Avon troubles persist with down-grading but battles on with rebranding

By Simon Pitman contact

- Last updated on GMT

Avon troubles persist with down-grading but battles on with rebranding

Related tags: Upgrade

Avon has announced an initiative to rebrand with a new global branding strategy, while also taking a significant two-notch downgrade from financial analysts at S&P.

The down grading was announced by S&P due to the company ‘persistent operational issues and increasing external headwinds’.

Meanwhile executives are desperate to reverse the company’s downward spiral, and to complement the ongoing massive cost savings program, it has now introduced a three-pronged rebranding called Beauty For A Purpose.

The initiative focuses on quality and value, the earnings potential of its direct sales staff, as well as an enhanced networking opportunity for those staff.

Avon’s two-notch downgrade

S&P announced on Friday that it was downgrading the company’s rating for the Avon Products business for double B to a single B, a double-notch reduction.

“Our two-notch downgrade on Avon is a result of our downward assessment of the company’s business risk profile and revised forecast for reduced financial performance, resulting in weaker projected credit metrics,”​ wrote S&P credit analyst Jacqueline Hui.

The analyst also noted that the downgrade was influenced by a significant impact from foreign currency translations, as well as a big reduction in the number of its sales staff – a crucial factor to its revenues.

Rebranding addresses staffing issues

In line with the criticism in the S&P analyst’s report, Avon’s new rebranding announcement makes a big effort to stem the loss of its staff by trying to enhance both earnings potential and career prospects.

"Beauty for a Purpose is a guiding vision for Avon's future and is rooted in our rich history of empowering women.  Financial independence is the most important driver of women's empowerment, and for over 125 years Avon has provided women with an earning opportunity,”​ said Sheri McCoy, Avon CEO, in a press statement accompanying the announcement.

The initiative is being accompanied by the launch of a new brand publishing website, called BeautyforaPurpose.com, which the company says reflects the new initiative and helps communicate the new advantages to staff.

Related topics: Business & Financial

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