Company History

Avon Products Inc. Profile:
Annual Revenue: $11 billion1
Product lines: Cosmetics, fashion lines and home products; such as Avon Color, Anew, Skin-So-Soft, Advance Techniques, Avon Naturals, and mark2.
Vision: To be the company that best understands and satisfies the product, service and self-fulfillment needs of women—globally.3.

The Founding of Avon

The company was founded over 125 years ago in 1886 by David H. McConnell. Avon was originally founded under the name of California Perfume Company, but would later change to Avon Products, Inc in 1939.4 Avon employed the approach of door to door selling using female sales representatives to appeal to other women interested in purchasing make up and perfume5. This new found source of income appealed to a wide variety of women, and this direct selling aspect has grown Avon into a multinational corporation.

Avon recent history:

Personal care products have been around for a very long time and are becoming more and more popular worldwide. These include everything from shampoo and soap to cosmetics and fragrances. People have always cared how they look, so if they had the luxury to buy such goods, they would. As more and more countries are becoming developed, giving people more disposable income, they are beginning to buy a larger quantity of personal care products. During economic downturns, however, this industry takes a large hit because it is one of the first things people will cut back on in order to save money. There is not a large number of companies who are in the personal care products industry, but the ones that do exist are very large, diverse companies. Each company is able to generate large sales because of the large number of products that they offer to consumers. The country with the largest growth in recent years has been Brazil, which experienced 13.6% growth in 2006 and now buys more Avon Products, than the United States.6 The current stock price on September 7, 2012 of Avon is $15.97 and it has been steadily declining the past year having a low of $14.45 and a high of $23.94. Even though the stock has been declining it is currently trading about its initial public offering which was $14.28 in 19727.

Avon has gone through a great deal in the past decade. Andrea Jung became the first female CEO in Avon's 126 year history. She brought change and expanded the company globally. From the day Jung took over to 2004, profits had tripled along with their stock price.8 In 2005, Avon became the only licensed foreign cosmetics company to sell door to door in China; and in 2007 revenues in Brazil was 1.3, which was second only to the United States revenues.9 This was all short lived as allegations that Avon had violated the Foreign Corrupt Practices Act (FCPA). Investigations led to the firing of a general manager and finance chief of the China unit.10 Avon also incurred a net profit margin decrease for three consecutive years from 2009-2011.11 With Avon facing pressure from its shareholders and its declining business, Andrea Jung was forced to step down as CEO and was replaced by Sherilyn McCoy in hopes to turn around the company.

Acquisitions

2012- Attempted takeover by Coty, a cosmetic maker that sells perfumes and high end nail polish, whose bid was struck down and termed opportunistic by the Avon Board of Directors.12

2010- Avon buys Silpada, a direct seller of silver jewelry, for 650 million dollars and runs it as a separate business13

2010- Avon acquires Liz Earle Beauty Co. LTD, a maker of cosmetic products in the UK for less than 10 million dollars14

2006- Avon takes over Family Cosmetics SAE, a company based in Egypt that manufactures and sells a range of beauty products chiefly skin care, lipsticks, eyeliners, and mascaras.15

Restructurings

2009- Avon builds a state of the art distribution center in the Midwest and upgrades technology and equipment throughout the organization to improve operating efficiencies.16

2005- Attempt by Avon to flatten the organization and bring executives closer to the sales representatives as well as moving operations into low cost countries through outsourcing.17

Avon News:
2012-Avon Hello Green Tomorrow Makes $1 Million Contribution, Bringing Program Total to More Than $4.5 million since 201018
2012- Avon launches new line called ANEW Clinical Pro Line Eraser Treatment19.
2012- Avon representatives in South Africa benefit from selling, making enough money for most household expenditures and helping the women grow professionally.20

2012- Avon takes on new CEO Sheri McCoy, a former executive with Johnson and Johnson.21

2009- Avon accused of violations of the Foreign Corrupt Practices Act, an internal investigation leads to the firing of several high level employees.22

2004- Avon releases new bug repellent line absent of toxic ingredients and safe to wear to bed.23

5 Competitors from Morningstar:

Estee Lauder Cos Inc Class A EL

Revlon Inc REV

L'Oreal SA ADR LRLCY

Elizabeth Arden RDEN

Ulta Salon Cosmetics & Fragrances ULTA

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Well done

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