Avon sales skid again; preliminary deal on bribery probe
By Phil Wahba
(Reuters) - Avon Products Inc's (AVP.N: Cotización) quarterly results on Thursday showed just how hard it will be for the direct seller of beauty products to turn itself around, with big setbacks in key markets like Russia, Latin America and the United States.
Shares fell 12.6 percent to $13.36 in afternoon trading. The company also announced it agreed to pay the U.S. government $135 million to settle a multiyear overseas bribery probe, under a preliminary deal.
Chief Executive Officer Sheri McCoy can scarcely afford the distraction of such an investigation at a time she is struggling to fix Avon two years into her term.
"A turnaround looks to be further off than either we or management had expected," BMO Capital Markets analyst Connie Maneaty said in a research note.
It was the second quarter in a row of poor results after signs in early 2013 that McCoy's turnaround was taking hold.
The 128-year-old company has been bedeviled by different problems in different markets. It has responded with steps such as introducing market-specific products in Russia and Mexico, and fixing a computer system that had stymied Brazilian sales representatives in getting their commissions.
In the United States, it is aggressively courting the Hispanic market.
Avon has also exited markets such as Vietnam and South Korea, while undertaking $400 million-a-year cost cuts. Continuación...